EUR/USD Price Steadies Before the US Rate Decision – What’s Next?

No Change Expected Before July

The Federal Reserve is expected to maintain interest rates at 4.5%, despite mounting pressure from President Trump, who continues to call for an immediate rate cut. Fed Chairman Jerome Powell has signalled a cautious, wait-and-see approach, emphasizing the need to evaluate the economic impact of tariffs before making any policy changes.

As a result, the Fed is likely to keep its current monetary policy unchanged through the May and June meetings, coinciding with the 90-day grace period during which President Trump suspended tariffs on all countries except China. Once this period ends in July, the Fed will be in a better position to assess the tariffs’ full economic impact and respond accordingly.

Possible Stagflation in the United States

The US economy contracted in the first quarter, largely due to a surge in imports as businesses sought to stockpile goods ahead of the anticipated April tariffs. In the second quarter, signs of recovery remain elusive, amid growing uncertainty about the US-China relationship and the pace at which the US administration will finalize trade agreements with other partners. This uncertainty is disrupting supply chains and reducing supply levels, potentially driving up commodity prices and, by extension, inflation.

However, such inflation may prove short-lived, as falling consumer purchasing power and stress on the services sector—particularly tourism and entertainment—could lead to lower demand and declining prices in some industries, ultimately softening inflationary pressures.

Upward Momentum Declines

On April 21, the EUR/USD reached a multi-year high of 1.1572 before pulling back due to profit-taking, stabilizing within a trading range between 1.1510 and 1.1176. The Relative Strength Index reflects weakening upward momentum, having dropped below 70 and settled above 50.

Currently, the pair appears to be heading toward a test of the low end of the mentioned trading zone at 1.1176. A daily close below that level would indicate the end of the current uptrend and a potential correction toward 1.0981. In that case, the support level of 1.1053 should be monitored.

Levels to Consider in the Opposite Scenario

A daily close above 1.1510 would signal renewed strength in the uptrend, potentially paving the way for a move toward 1.1715. However, the resistance level at 1.1664 should be kept in focus.

EUR/USD price – Daily Chart

Chart Source: ADSS Platform