The euro hovered near a one‑month low on Wednesday, recovering slightly after sharp declines earlier this week as investors weighed the impact of the new U.S.–EU trade pact and awaited key policy meetings from the Federal Reserve and the Bank of Japan (BOJ).
The euro rose 0.12% to $1.1558 after touching $1.15185 on Tuesday, its weakest level in a month. Despite gaining 11.7% year‑to‑date, the currency is heading for its first monthly loss in 2025. The dollar index stood at 98.815, close to a one‑month high, supported by investor caution ahead of central bank updates.
The U.S. dollar has regained strength amid a lopsided trade framework between Washington and Brussels, with analysts noting the agreement’s vague terms and limited enforcement. Meanwhile, U.S.–China trade negotiations in Stockholm concluded with a commitment to extend their 90‑day tariff truce, though no breakthroughs were announced.
Market attention is now on the Federal Reserve’s policy decision later Wednesday. The Fed is widely expected to hold interest rates steady, but investors will closely analyze Chair Jerome Powell’s comments for signals on future moves. Speculation is growing that internal dissent from policymakers like Christopher Waller or Michelle Bowman could highlight political pressure from President Donald Trump, who has repeatedly called for rate cuts.
The BOJ is also set to keep rates unchanged, with Governor Kazuo Ueda’s remarks in focus as traders assess whether the recent U.S.–Japan trade deal could pave the way for a rate hike later this year.
Other major currencies were steady, with sterling at $1.3358, the Australian dollar at $0.6517, the offshore yuan at 7.178 per dollar, and the yen firming slightly to 148.20 per dollar.
Global currency markets remain sensitive to trade developments and central bank guidance amid heightened geopolitical uncertainty.


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