Euro wobbles ahead of Fed Powell’s testimony

The EURUSD currency pair ticked higher but is broadly sideways around 1.0300 in Tuesday’s North American session as investors await the Federal Reserve Chair’s testimony before Congress.

Investors will pay close attention to Jerome Powell’s comments to know for how long the Fed will keep interest rates steady in the 4.25-4.50% range and the likely impact of 25% tariffs on all steel and aluminium imports on the monetary policy outlook.

In January, the Fed left interest rates unchanged and Powell said that the central bank will remain in the waiting mode until it sees “real progress in inflation or at least some weakness in labor market”.

On Monday, President Donald Trump signed executive orders of a 25% levy on imports of steel and aluminium from all nations, which will come into effect on March 12.

Trump also said that there will be reciprocal tariffs over nations where he sees unfair trade practices in the coming days. The US President has outlined tariffs on metals to boost local production and reduce dependence on other nations.

Market participants are concerned over Trump’s international agenda, which is expected to result in a global trade war and high inflation in the US economy.

For fresh cues on inflation, investors will focus on the US Consumer Price Index (CPI) data for January, which will be released later on Wednesday.

Economists expect the annual core CPI – which excludes volatile food and energy prices – to have grown at a slower pace of 3.1%, compared to a 3.2% increase in December. In the same period, the headline inflation is estimated to have remained steady at 2.9%.

(Source: OANDA)