EUR/USD declines as US Dollar strengthens before Fed decision

The EUR/USD currency pair gave up its recent gains after hitting a five-month high. On Tuesday, it reached around 1.0955 before dropping back as the US Dollar gained strength ahead of the Federal Reserve's interest rate decision, scheduled for Wednesday. Analysts expect the Fed to maintain current interest rates in the range of 4.25% to 4.50%. This would be the second consecutive meeting without a rate change. Traders are showing confidence that the Fed will adopt a "wait and see" approach due to the uncertainty surrounding President Trump's economic policies, which include potential tariffs on imported goods. The outlook for the US economy has become cautious because of these looming tariffs. Officials worry these tariffs could lead to inflation and even a recession. The Organization for Economic Cooperation and Development (OECD) has predicted a slowdown in US economic growth over the next few years. In Germany, a vote on a significant debt restructuring plan is set to take place. The plan involves a 500 billion Euro infrastructure fund intended to increase defense spending. This initiative is expected to pass, allowing for greater borrowing to help boost economic growth. This news has positively influenced the Euro, which has been strengthening in recent weeks. Additionally, the German ZEW Economic Sentiment Index has shown improvement, suggesting increased optimism among investors. Looking to the future, traders will also monitor ongoing talks between the US and Russia regarding a ceasefire in Ukraine, which could further affect market dynamics. The EUR/USD pair is currently facing resistance at the 1.1000 level and support around 1.0630.