The EUR/USD pair has inched higher during the Asian session on Thursday, recovering slightly after a four-day losing streak that saw the pair hit a one-week low. Currently trading around the 1.0500 psychological level, the pair is up by just over 0.10% for the day. Traders are now closely awaiting the European Central Bank’s (ECB) highly anticipated decision, which will likely set the tone for further movement in the Euro.
The ECB is widely expected to cut interest rates again amid concerns over a weakening Eurozone economy, though the market remains divided over the extent of the cut. The key focus will be on the accompanying monetary policy statement and ECB President Christine Lagarde’s comments at the post-meeting press conference. Investors are particularly interested in any signals regarding potential further easing in 2025, which could significantly impact the Euro and provide direction for the EUR/USD pair.
US Dollar’s Bullish Momentum Capping EUR/USD’s Upside
In the lead-up to the ECB meeting, the EUR/USD pair is receiving some support from subdued US Dollar (USD) price action. However, the near-term bias for the USD remains tilted towards the bullish side. Growing expectations that US President-elect Donald Trump’s economic policies will drive inflation are pushing bond yields higher, which in turn is supporting the USD. This is limiting the upside for the EUR/USD pair, with concerns over the potential economic impact of Trump’s tariff plans adding an additional layer of caution.
Traders are also monitoring upcoming US economic data, including the Producer Price Index (PPI) and weekly Initial Jobless Claims, for further insight into the health of the US economy. The US bond market and broader risk sentiment will also play critical roles in driving the USD’s direction, offering potential short-term opportunities for EUR/USD traders.
In summary, while the EUR/USD pair has regained some ground, the key ECB decision, US data releases, and shifting market dynamics will continue to influence the shared currency’s near-term outlook.
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