EUR\/USD is stable, holding around 1.1770, with cautious trading observed before the release of the FOMC December Meeting Minutes. The US Dollar remains unchanged as markets anticipate insights into the Federal Reserve\u2019s outlook for 2026.<\/p>\n
Expectations of two more Federal Reserve rate cuts in 2026 may influence the EUR\/USD pair. The CME FedWatch tool shows an 83.9% probability of rates being held at the Fed\u2019s January meeting, with a 16.1% chance for a 25-basis-point rate cut.<\/p>\n
The US Federal Reserve lowered interest rates by 25 basis points at its December meeting. This was part of a cumulative 75 bps of cuts in 2025 amid cooling labour markets and persistent inflation.<\/p>\n
The Euro may contend with risks stemming from the Ukraine-Russia situation. Russia\u2019s foreign minister indicated a shift in Moscow\u2019s stance after alleged strikes on President Putin\u2019s residence.<\/p>\n
The Euro’s downside might be limited by differing policy paths of the European Central Bank and the US Federal Reserve. The ECB held rates steady in December, with indications of no immediate changes, emphasising ongoing uncertainty. <\/p>\n
The Euro, used by 20 EU countries, is the second most traded currency globally. It accounted for 31% of foreign exchange transactions in 2022, with EUR\/USD being the most traded currency pair.<\/p>\n
We see EUR\/USD holding around 1.1770, but the real test comes later today with the release of the FOMC meeting minutes. These minutes will give us the first real clue if the Fed’s dovish pivot from the December meeting will carry into 2026. For now, the market is betting on more rate cuts, which is keeping a lid on the US Dollar.<\/p>\n
The case for a weaker Dollar is supported by recent data we’ve seen through the end of 2025. The November 2025 Consumer Price Index (CPI) in the US cooled to 3.0%, and the latest jobs report showed nonfarm payrolls at a modest 150,000, pushing unemployment up slightly to 4.1%. This gives the Fed plenty of room to continue the easing cycle it started earlier in 2025.<\/p>\n
In contrast, the situation in the Eurozone supports a stronger Euro, with the latest HICP inflation data for November 2025 showing a sticky 3.5%. This reinforces the European Central Bank’s stance to hold interest rates steady for some time, creating a clear policy divergence against the Fed. This fundamental difference is the main reason we expect the EUR\/USD to have a supportive floor in the coming weeks.<\/p>\n
Given the uncertainty ahead of the minutes, we should expect a spike in short-term volatility. The CBOE Volatility Index (VIX) hovering around 18 suggests the market is already on edge, so buying options might be a bit expensive. Using option spreads to define risk, or even selling puts below the 1.1700 level, could be a way to express a cautiously bullish view on EUR\/USD.<\/p>\n
We must also keep an eye on the geopolitical situation involving Russia and Ukraine, as any escalation could quickly shift sentiment. A flight to safety would benefit the US Dollar and undermine the Euro, regardless of central bank policies. This risk means we should avoid being overly aggressive with long Euro positions until the headlines become clearer.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" EUR\/USD steady at 1.1770 as markets await FOMC minutes; Fed policy, Euro risks in focus.<\/p>\n","protected":false},"author":62,"featured_media":16959,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-37894","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/37894","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/users\/62"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/comments?post=37894"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/posts\/37894\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media\/16959"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/media?parent=37894"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/categories?post=37894"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-asia\/wp-json\/wp\/v2\/tags?post=37894"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}