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• EUR/USD holds steady near 1.1400 in Thursday’s early Asian session.
• Fed’s Powell warned that Trump’s tariffs could lead to a challenging scenario for the US central bank.
• The ECB is widely expected to cut interest rates for the third time this year on Thursday.

The EUR/USD pair trades on a flat note near 1.1400 during the early Asian session on Thursday. The markets remain cautious as traders wait to see if US President Donald Trump’s administration reaches new trading agreements with partners. The European Central Bank (ECB) interest rate decision will take center stage later on Thursday. 

Federal Reserve (Fed) Chair Jerome Powell said on Wednesday that trade tensions risk undermining the Fed’s employment and inflation goals. Powell added that US economic growth appears to be slowing, with consumer spending growing modestly, a rush of imports to avoid tariffs likely to weigh on estimates of Gross Domestic Product (GDP), and sentiment souring. The concerns over the economic slowdown in the US might drag the US Dollar (USD) lower and create a tailwind for the major pair. 

Across the pond, the ECB is widely expected to cut its key interest rate by 25 basis points (bps) on Thursday, marking a sixth consecutive reduction amid global tariff tensions and economic uncertainty. “We expect the ECB to cut policy rates by 25bp, fully priced, with dovish communication on the outlook, cracking the door open to rates below neutral,” said Bank of America economist Ruben Segura Cayuela. 

Traders will take more cues from the ECB Press Conference. Any dovish remarks from policymakers could weigh on the shared currency in the near term. However, analysts believe ECB President Christine Lagarde is unlikely to offer any hints about future rate reductions amid the uncertainty, and the ECB might decide its next steps as data come in.

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