EUR/USD softens below 1.1750 after Fed Minutes

• EUR/USD softens to around 1.1745 in Wednesday’s early Asian session. 

• Fed Minutes showed most officials expect additional rate cuts. 

• The ECB kept interest rates unchanged earlier this month and hinted that they are likely to remain steady for some time.

The EUR/USD pair attracts some sellers near 1.1745 during the early Asian session on Wednesday. The US Dollar (USD) edges higher against the Euro (EUR) after the release of minutes from the Federal Reserve's (Fed) December meeting. The US Initial Jobless Claims report will be released later in the day. Trading volumes are expected to remain thin ahead of the New Year holidays.

According to minutes from the Fed at its December 9-10 meeting, the US central bank decided to cut the interest rate by 25 basis points (bps), bringing the federal funds rate to a target range of 3.50%–3.75%. Those in favor cited increased downside risks to employment and easing inflation pressures. Governor Stephen Miran voted against the action in favor of a jumbo rate cut, while Chicago Fed President Austan Goolsbee and Kansas City’s Jeff Schmid dissented in favor of leaving rates unchanged.

Most Fed officials saw further interest-rate reductions as appropriate so long as inflation declines over time, though they remained divided over when and how far to cut. Following the FOMC minutes’ release, the probability of a January cut based on federal funds futures contracts declined slightly to about 15%, according to the CME FedWatch tool. 

”We don't have any direction in Fed policy, and so you're seeing that reflected in the dollar and the currency rates, you're seeing it reflected in the interest rates as well in the Treasury rates, so the market doesn't have a lot to work with right here," said Joseph Trevisani, senior analyst at FX Street in New York.

On the other hand, signals that the European Central Bank (ECB) rate cut cycle is ending might help limit the shared currency’s losses. The ECB held interest rates steady earlier this month and signaled they would likely remain so for some time. ECB President Christine Lagarde stated that the central bank cannot provide forward guidance on future rate moves due to high uncertainty, emphasizing a data-dependent, meeting-by-meeting approach.  The money market has priced in for a 25 bps interest rate cut by the ECB in February 2026, currently remains below 10%.