The post EUR/USD declines as US House of Representatives passes Trump’s tax cut plan appeared on BitcoinEthereumNews.com.

EUR/USD retraces below 1.0500 on Wednesday as the US Dollar gains amid a strong recovery in US bond yields. Republicans-controlled House of Representatives passed a $4.5 trillion tax cut plan on Tuesday. Investors await the preliminary German HICP for February and the US PCE inflation data for January, scheduled for Friday. EUR/USD continues to face selling pressure above the psychological level of 1.0500 in Wednesday’s European session. The major currency pair falls due to a strong recovery in the US Dollar (USD). The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, recovers sharply to near 106.50 after a weak opening around the 11-week low of 106.10 earlier in the day. The Greenback capitalizes on a strong recovery in US bond yields, which had been sliding for almost a month. The 10-year US Treasury yields jump to near 4.33% after posting a fresh 13-week low at around 4.28% earlier in the day. A green light to United States (US) President Donald Trump’s $4.5 trillion tax cut plan by the House of Representatives forced traders to dump government bonds, assuming that lower taxes on individuals would accelerate their purchasing power. Such a scenario would prompt inflationary pressures and force the Federal Reserve (Fed) to keep interest rates in the current range of 4.25%-4.50% for longer. For fresh cues on the current status of inflation, investors await the US Personal Consumption Expenditures Price Index (PCE) data for January, which will be released on Friday. The core PCE inflation data – the Fed’s preferred inflation gauge as it excludes volatile food and energy items – is estimated to have decelerated to 2.6% year-over-year from 2.8% in December. Soft underlying inflation data would weigh on market expectations that the Fed will remain in the “waiting” mode for longer. Daily digest…

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Filed under: News - @ February 26, 2025 10:27 am