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EUR/USD was trading around 1.1340 in Asian session on Wednesday, rebounding after two consecutive days of decline. The pair was supported by more positive global risk sentiment, helped by U.S. President Donald Trump’s decision to exempt key technology products from “reciprocal” tariffs.
However, further gains in the euro (EUR) may be limited as the European Central Bank (ECB) is widely expected to cut interest rates by 25 basis points on Thursday. The move comes amid rising recession fears related to U.S. trade policy. The ECB has cut interest rates twice this year, and its deposit facility rate is currently 2.5%. If the rate is cut this week, it will fall to 2.25%.
Investors will be closely watching ECB President Christine Lagarde’s press conference for signals on the central bank’s policy direction for the rest of the year and views on the potential economic impact of U.S. tariffs on the euro zone.
Meanwhile, the CME FedWatch tool shows that the market expects the Fed to cut interest rates by about 85 basis points by the end of the year, and the Fed is expected to keep interest rates unchanged at its upcoming meeting. Later in the day, markets will be eyeing U.S. retail sales data for March, which may shed further light on the impact of tariff uncertainty on consumer spending.
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