EUR/USD exchange rate muted ahead of Fed and ECB Meetings

On Tuesday, the EUR/USD exchange rate remained muted, leaving the pair to trade at around $1.1082.

The dollar was also steady against a basket of currencies at 97.605.

The pair remained flat as the markets remained wary of the looming deadline for the U.S. tariff on Chinese exports.

The USD was neutral against a handful of other major currencies ahead of the Fe Reserve and the ECB meetings this week.

Traders expect the Fed and ECB to leave rates steady tomorrow.

After the Fed meeting, investors will likely look ahead and focus on the US-China trade negotiations.

Against the euro, the dollar was last flat at $1.1072, and against the Japanese yen, the dollar found support after last week’s declines, steadying at 108.62 yen.

The Chinese yuan — the most sensitive currency to the U.S. and China trade war — was also trading neutral against the U.S. dollar in the offshore market, last at 7.0370.

Soaring inflation in China, ahead even of lofty expectations, had little effect on a market waiting for trade news.

Kit Juckes, a macro strategist at Societe Generale, called markets “dull.”

Investors are almost confident the Fed will hold rates steady when its two-day meeting concludes on Wednesday, increasing investors’ focus on the outlook and on finding a trade-war truce.

They also expect the ECB to keep interest rates steady. 

Elsewhere, the GBP maintained its recent gains, last at $1.3140 and 84.26 pence against the euro. 

Market participants are expecting a Conservative Party majority win as the most likely outcome of the general election on Thursday.

USD flat as markets eye the scheduled U.S. tariffs

Global markets continue to bet the U.S. and China will reach a trade deal- meaning the U.S. will not implement additional tariffs.

Last week, White House adviser Larry Kudlow stated that the Dec 15 deadline was still in place. 

However, Bloomberg reported that the U.S. was unlikely to implement tariffs, according to U.S. Agriculture Secretary Sonny Perdue.

‘We have a deadline coming up on the Dec 15 for another tranche of tariffs, I do not believe those will be implemented, and I think we may see some backing away.’ Sonny said.

Also, U.S. President Trump said he did not want to hit China with further tariffs, but wanted to see ‘movement’ from China.