The EUR/USD pair continued its decline on Thursday, pressured by a stronger U.S. Dollar and rising geopolitical tensions. Investors remained cautious following a volatile U.S. session on Wednesday, driven by renewed friction between U.S. President Donald Trump and Federal Reserve Chair Jerome Powell. As a result, the safe-haven USD gained ground ahead of key U.S. economic releases, including retail sales and weekly jobless claims.
During Thursday’s European trading hours, the Euro (EUR) extended its losses, hitting a session low of 1.1575 — approaching its lowest level in three weeks at 1.1565. The pair remains entrenched in a bearish trend, with price action sitting near the bottom of a downward channel that began at the July 1 high of 1.1830.
Markets briefly stabilized on Wednesday after President Trump stated he had no plans to fire Powell, noting that such an action could destabilize markets. However, he added that he would prefer Powell to resign — a comment later denied by a Federal Reserve spokesperson. Trump further suggested Powell could be dismissed over alleged overspending related to the renovation of the Fed’s historic Washington building, even hinting at potential fraud charges.
The growing rift between Trump and Powell has triggered speculation that the President may seek to replace the Fed Chair with a more dovish successor. Such a move could lead to higher inflation expectations and potentially undermine investor confidence in both the Federal Reserve’s independence and the broader U.S. financial system.
On the European front, final inflation data for June confirmed preliminary estimates. The Eurozone Consumer Price Index (CPI) rose 0.3% month-over-month and 2.0% year-over-year — slightly higher than May’s 1.9% annual figure but still aligned with the European Central Bank’s inflation target. Core CPI increased by 0.4% for the month and 2.3% year-over-year, matching earlier projections.
