EUR/USD recovers with trade talks and Fed independence in focus

• The Euro recovers against the US Dollar with concerns over the Fed's independence limiting losses.
• EUR/USD price action recovers above 1.1600 as momentum turns neutral.
• Tariffs and trade deals remain in focus for the EUR/USD pair.

The Euro (EUR) is strengthening against its US Dollar (USD) counterpart on Wednesday, as traders shift focus to concerns surrounding the potential replacement of Federal Reserve (Fed) Chair Jerome Powell.

Following five consecutive days of losses, EUR/USD reached an intraday low at 1.1562 before recovering to trade back above 1.1600 at the time of writing.

With US President Donald Trump ramping up efforts to remove Jerome Powell as the Chairman of the Federal Reserve, concerns over the independence of the central bank are weighing on the US Dollar.

EUR/USD price action recovers with support at 1.1600

On the technical front, EUR/USD has staged a notable recovery on Wednesday, with the 1.1600 psychological level now providing support for the immediate move.

The pair is now trading near 1.1670, with the 1.1700 psychological resistance level forming an additional barrier for the short-term move. With EUR/USD moving toward the 20-day Simple Moving Average (SMA) at 1.1683, the Relative Strength Index (RSI) at that momentum remains neutral.

However, with trade talks in focus, downside risks remain. The 38.2% Fibonacci retracement level of the May-July move provides additional support at 1.1538, which could bring the 1.1500 level back into focus.

Meanwhile, the 10-day Simple Moving Average (SMA) at 1.1691 and the 20-day SMA at 1.1680 have transformed into resistance, indicating growing bearish pressure.

Meanwhile, the 50-day SMA at 1.1483 marks the next major support. Immediate downside targets lie between 1.1480 and 1.1440, where the 50-day SMA converges with the 50% Fibonacci retracement level.