EUR/USD pulls back from two-week high of 1.1761 reached on Tuesday, trading around 1.1740 during the Asian hours on Wednesday. The pair depreciates as the US Dollar (USD) gains ground. United States (US) President Donald Trump announced a trade deal with Japan that includes a 15% tariff on Japanese exports to the US. As part of the agreement, Japan will invest $550 billion in the US and open its markets to key American products.
President Trump said during a meeting with the Philippines President Bongbong Marcos on Tuesday that “I think we will get a trade deal; we’re close to a trade deal.” I don’t mind if the Philippines gets along with China, he added.
However, the upside of the Greenback could be restrained due to ongoing concerns over the Federal Reserve’s (Fed) independence. Trump took the opportunity to renew his criticism of Fed Chair Jerome Powell, saying, “Powell’s going to be out soon anyway; he’s got to be out in eight months.” Trump argued that the economy remains strong and claimed the Fed is keeping interest rates too high, insisting, “We should be at 1%.”
Traders await European Commission’s (EC) Consumer Confidence due later in the day, with expectations of declining by 15 points in July. Furthermore, the European Central Bank (ECB) is scheduled to deliver its interest rate decision on Thursday, with no change in rates expected. ECB President Christine Lagarde said last month that the easing cycle is coming to an end after eight quarter-point cuts that brought the deposit rate to 2.0%.
