The EUR/USD pair extended its losses for a second consecutive session on Thursday, trading around 1.0280 during the Asian hours. The currency pair faces downward pressure as European Central Bank (ECB) officials continue to signal the likelihood of further policy easing, fueled by the Eurozone’s fragile economic outlook.
At a conference on Monday, ECB policymaker and Bank of Finland Governor Olli Rehn suggested that monetary policy could exit restrictive territory by “midsummer,” further reinforcing expectations of an easing cycle in the coming months.
Despite the bearish sentiment around the euro, the EUR/USD pair gained some ground after the US Dollar (USD) extended its decline. This followed cooler-than-expected US Consumer Price Index (CPI) data for December, which sparked speculation that the US Federal Reserve (Fed) could implement two interest rate cuts this year.
The US CPI rose 2.9% year-over-year in December, slightly higher than the previous month’s 2.7%, in line with market expectations. On a monthly basis, CPI increased by 0.4%, following a 0.3% rise in November. Meanwhile, Core CPI, which excludes volatile food and energy prices, increased 3.2% annually in December—just below both the previous month’s 3.3% and analysts’ forecast of 3.3%. Month-over-month, Core CPI rose by 0.2%.
The latest Beige Book survey from the Federal Reserve, released on Wednesday, revealed that economic activity showed slight to moderate growth across the twelve Federal Reserve Districts in late November and December. Consumer spending increased moderately, driven by strong holiday sales, while manufacturing activity saw a slight decline, as some manufacturers built inventories in anticipation of higher tariffs.
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