EUR/USD holds near 1.1660 as Fed Minutes clash with Trump's pressure

• EUR/USD retreats from daily highs of 1.1672 after Fed Minutes release.
• Fed Minutes: Officials see inflation risk outweighing employment, hinting rates not far above neutral.
• Breaking news: Trump urges Fed Governor Lisa Cook to resign following mortgage fraud allegations.

EUR/USD advances steadily during the North American session as the Federal Reserve (Fed) unveils its latest Meeting Minutes. At the time of writing, the pair trades at around 1.1660 and clings to minimal gains of 0.13%.

Hawkish Fed Minutes caps Euro's advance; Trump presses Fed governor to resign amid fraud probe

The Minutes of the Fed's August meeting showed that the majority of the board "saw inflation risk outweighing employment risk," and that several officials said, "that the current rate may not be far above neutral." This contradicts what US Treasury Secretary Scott Bessent argued in a Bloomberg interview, that interest rates should be lower by 150 to 175 basis points (bps).

After the release of Minutes, the EUR/USD retreated from around daily highs of 1.1672 to 1.1660, which seems to be a hawkish reaction by market participants.

Meanwhile, the White House continues to pressure Fed officials to reduce interest rates, as breaking news revealed that "Trump presses Fed's Cook to quit after mortgage fraud allegation."

Earlier, a Bloomberg article revealed that the Federal Housing Finance Agency Director Bill Pulte alleged that Fed Governor Lisa Cook "falsified bank documents and property records to acquire more favorable loan terms, potentially committing mortgage fraud under the criminal statute."

Across the pond, July's inflation in the Eurozone remained steady at around the European Central Bank's (ECB) 2% target.

Daily digest market movers: EUR/USD clings to gains on soft US Dollar

• Digging deeper into the Federal Open Market Committee (FOMC) Meeting Minutes, several officials noted concerns about high asset valuations and that "Many (officials) noted full effect of tariffs could take some time." Several Fed policymakers commented that they expect "companies would pass tariffs to customers," and that "some participants said it would not be feasible or appropriate to wait for complete clarity on the tariff's effects on inflation before adjusting monetary policy."
• The European Union (EU) Harmonized Index of Consumer Prices (HICP) rose by 2% YoY as expected in July. Core HICP figures came at 2.3% YoY as expected and unchanged from June's print.
• ECB's President Christine Lagarde said that recent trade deals have alleviated but not eliminated uncertainty. She added that the European economy remains resilient in the face of a challenging global environment. Despite this, September projections for the Euro area suggest that growth would slow in Q3 2025.
• The direction of EUR/USD is influenced by safe-haven demand and monetary policy divergence between the Fed and ECB. Expectations that the Fed will reduce rates at the September meeting remain high at around 82%. Across the Atlantic, the ECB is expected to hold rates unchanged, with odds standing at 91% odds for the central bank to keep rates unchanged, and a slim 8% chance of a 25-basis-point (bps) rate cut.

Euro's technical outlook: EUR/USD looms around 1.1650, directionless

EUR/USD's neutral bias stays in place as depicted by two technical signals: price action with no clear direction and almost flat short-term daily Simple Moving Averages (SMAs); and the Relative Strength Index (RSI) meandering around its neutral line.

If the EUR/USD climbs above the August 19 high of 1.1692, a move toward 1.1700 is on the cards. Further gains await once cleared, as the July 24 high of 1.1788 emerges as key resistance, followed by 1.1800 and the year-to-date high at 1.1829.

On the flip side, if EUR/USD tumbles below the confluence of the 50-day and 20-day Simple Moving Averages (SMA) at 1.1643/29, it could trigger a move toward 1.1600, with the 100-day SMA at 1.1460 as the next downside target.