EUR/USD Slips Below 1.1500 Amid Rising USD Demand Ahead of Fed and ECB Meetings
The EUR/USD currency pair has edged lower during the Asian trading session on Tuesday, slipping just below the critical psychological level of 1.1500. This movement follows a modest recovery from the recent lows near 1.1410, the lowest mark for the pair since July 2025. Market participants remain cautious as they await key policy decisions from the U.S. Federal Reserve (Fed) and the European Central Bank (ECB) scheduled for later this week.
Revival of USD Demand on Fed Rate Outlook
Investor sentiment has shifted in favor of the U.S. Dollar (USD) amid growing speculation that the Fed may delay cutting interest rates. Reduced bets on imminent rate cuts have bolstered the USD, encouraging dip-buying activity and limiting any further slide in the currency pair from its recent highs not seen since May 2025. The U.S. central bank’s upcoming two-day meeting, concluding on Wednesday, is at the forefront of market focus, as policymakers weigh inflation risks in light of a sharp spike in crude oil prices linked to the ongoing war in Iran.
Euro Under Pressure from Energy Crisis Concerns
Conversely, the Euro has been pressured by fears that elevated crude oil prices could negatively impact Eurozone economic growth. The region’s heavy dependence on imported energy aggravates concerns about potential inflationary pressures and economic slowdown, dampening demand for the shared currency. Market participants are wary that these headwinds may weigh on the EUR/USD pair, causing hesitation among bullish traders.
Geopolitical Developments and Risk Sentiment
On the geopolitical front, U.S. President Donald Trump renewed calls for international cooperation to reopen shipping lanes in the strategic Strait of Hormuz, a vital passage for global oil trade. This appeal contributed to a modest improvement in global risk sentiment, reflected in positive movements within equity markets. The shift helped temper the safe-haven demand for the USD, reducing the likelihood of a sharp Greenback rally ahead of the Fed and ECB decisions.
Looking Ahead: Key Central Bank Meetings
The Federal Open Market Committee (FOMC) announcement on Wednesday and the ECB policy decision on Thursday are set to be closely monitored for guidance on monetary policy direction amid inflation concerns. Market analysts expect these central bank meetings to be pivotal in determining the near-term trajectory of the EUR/USD pair. A hawkish tone could reinforce USD strength, while dovish signals may offer some respite to the Euro.
Understanding the Euro and ECB Impact
The Euro, used by 20 European Union countries, stands as the world’s second most traded currency after the USD. The European Central Bank, headquartered in Frankfurt, Germany, steers monetary policy aimed at ensuring price stability by adjusting interest rates. Inflation data, particularly the Harmonized Index of Consumer Prices (HICP), plays a significant role in ECB decisions. Inflation above the 2% target typically prompts interest rate hikes, often supporting the Euro’s value.
Other economic factors such as GDP, manufacturing and service PMIs, employment figures, and trade balances also influence the Euro’s strength. Notably, the four largest Eurozone economies—Germany, France, Italy, and Spain—make up three-quarters of the region’s economic output, making their data releases highly impactful.
Market participants are advised to exercise caution trading the EUR/USD pair amid the complex mix of geopolitical tensions, energy market disruptions, and central bank policy uncertainty.
Author: Haresh Menghani, FXStreet
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