Euro Strengthens Ahead Of Germany’s Trade Balance Data

EUR/USD extends its gains for the second successive day, trading around 1.1430 during the Asian hours on Thursday. The Euro (EUR) receives support against the US Dollar (USD) ahead of Germany’s Trade Balance data release later in the day. Traders will likely shift their focus to Friday’s Harmonized Index of Consumer Prices (HICP) data.

The US Dollar (USD) underperforms as the Federal Reserve’s (Fed) June Meeting Minutes underscored a widening rift among policymakers during Kevin Warsh’s debut meeting as FOMC Chairman on June 16–17. While a portion of the committee anticipated that the benchmark rate, currently holding at a target range of 3.50% to 3.75%, would likely end the year unchanged or lower, a hawkish contingent strongly argued that persistent price pressures would require a rate hike by year-end.

However, this internal friction has reinforced market expectations that the US central bank will keep interest rates higher for longer to combat stubborn inflation. Reflecting this hawkish shift, the CME FedWatch tool showed that swap traders have pushed the probability of a rate hike at the upcoming Fed meeting past 30%, up sharply from less than 20% just last week.

The Greenback's downside may be cushioned by a surge in safe-haven demand amid escalating geopolitical tensions between the US and Iran. Following two days of renewed US military strikes, Iranian Parliament Speaker Mohammad Bagher Ghalibaf issued a sharp warning to Washington, declaring that any further American action would trigger immediate retaliation. Crucially, Ghalibaf reiterated that access to the strategic Strait of Hormuz remains firmly under Iranian control, stoking fresh market anxieties over energy-driven supply shocks and resurgent global inflation.