The Federal Reserve maintained rates at 3.5%-3.75% but saw dissent for a 25 basis point hike, weighing on the euro ahead of key GDP data.
The EUR/USD pair slipped to 1.1465 in early Asian trading after the Federal Reserve held interest rates steady at 3.5%-3.75%. Three regional Fed presidents dissented, favoring a 25 basis point increase, signaling a hawkish tilt despite the pause.
Markets had largely priced in the Fed’s decision, but the dissent and Fed Chair Kevin Warsh’s comments on inflation targets added uncertainty. Attention now shifts to Eurozone and German Q2 GDP data, with economists forecasting modest growth of 0.2% and 0.1% quarter-over-quarter, respectively.
A stronger-than-expected GDP print could provide near-term support for the euro, while weaker data may extend losses. ECB policymaker Peter Kazimir earlier indicated further rate hikes are likely to curb inflation.