EUR/USD looks for direction in thin markets with Fed minutes in focus

EUR/USD finds support near 1.1750 after pulling back from three-month highs past 1.1800.
Growing geopolitical risks are likely to limit the Euro’s upside attempts.
Investors await the release of the minutes of the last Fed Monetary policy meeting.

EUR/USD is practically flat on Tuesday, trading near 1.1770 at the time of writing amid the current market lull ahead of the New Year holiday. The common currency has found support not far from the three-month highs in the 1.1800 area, but the rising geopolitical tensions are weighing on risk appetite on thinned year-end trading, keeping the Euro’s (EUR) upside attempts limited.

The US Dollar, on the other hand, is on track to close its worst yearly performance in almost a decade. Monetary policy divergence between the European Central Bank (ECB), which seems to have reached the end of its easing cycle, and the US Federal Reserve (Fed), which is expected to cut rates between one and three times next year, underpins the pair, which shows a nearly 14% appreciation in 2025.

Against this background, the market awaits the US central bank to release the minutes of its December Monetary policy meeting, due at 19:00 GMT. The Fed delivered a widely expected rate cut two weeks ago and signalled 25 basis points of further cuts in 2026, amid a widely split monetary policy committee. Furthermore, Chairman Jerome Powell ends his term next May and will be replaced by a more dovish successor. All things considered, the market is betting on a significantly steeper easing cycle in the US.