The EUR/USD pair trades weaker near 1.1635 in early Wednesday’s Asian session as traders turn cautious before the Federal Reserve’s (Fed) policy announcement. Renewed optimism over a potential US–China trade breakthrough is boosting demand for the US Dollar (USD) and weighing on the Euro (EUR). Market focus will later shift to the European Central Bank (ECB) meeting scheduled for Thursday.
According to Reuters, US President Donald Trump said he expects to lower tariffs on Chinese imports in exchange for Beijing’s promise to restrict the export of fentanyl precursor chemicals. Meanwhile, US Treasury Secretary Scott Bessent added that China is also likely to expand its purchases of US soybeans, strengthen cooperation to curb illegal chemical exports, and finalize the TikTok deal.
Investors will also monitor Thursday’s meeting between Trump and Chinese President Xi Jinping in South Korea, where both leaders are expected to discuss a framework to ease trade tensions. Any positive outcome could strengthen the Greenback further and pressure the EUR/USD pair.
Meanwhile, the Fed is widely expected to deliver a 25-basis-point rate cut at its October meeting, bringing the federal funds rate target range down to 3.75%–4.00%. Market participants will closely follow Fed Chair Jerome Powell’s post-meeting remarks for clues on future policy direction. Any dovish tone from the Fed could weaken the USD and support the EUR.
In contrast, the ECB is anticipated to maintain its current policy stance for a third consecutive meeting on Thursday. ECB President Christine Lagarde has signaled that policy is “in a good place” and emphasized a data-dependent approach without committing to a defined rate path.
