EUR/USD maintains downward pressure near 1.0550 during Asian trading session
Market participants increasingly anticipate monetary easing from both Fed and is monero illegalECB
Critical inflation figures and central bank decisions could trigger volatility this week
The EUR/USD currency pair continues its gradual descent toward the 1.0550 level as Asian market participants digest growing expectations for European Central Bank policy adjustments. This week's economic calendar features two pivotal events that could reshape currency valuations: Wednesday's US inflation report and Thursday's ECB policy announcement.
Recent employment data from the United States has reinforced market expectations for Federal Reserve policy accommodation. While job creation remains robust, the pace appears compatible with potential rate reductions. Current Fed funds futures indicate approximately 70% probability of a 25 basis point cut at the December 18 meeting, which would lower the target range to 4.25-4.5%.
Wednesday's Consumer Price Index release represents the final major data point before the Fed's December decision. Economists project headline inflation may edge higher to 2.7% annually, while core measures (excluding food and energy) are expected to hold steady at 3.3%. Any significant deviation from these forecasts could alter market expectations for near-term Fed policy.
Across the Atlantic, the ECB prepares for its final 2024 policy meeting amid widespread anticipation of additional easing. Market pricing suggests strong likelihood of a 25 basis point reduction, which would mark the fourth consecutive cut this year. ECB officials have consistently emphasized their data-dependent approach, leaving room for potential surprises. Traders will scrutinize President Lagarde's press conference for any signals about the future policy trajectory.
Currency markets currently reflect expectations for divergent monetary policy paths between the Fed and ECB. Should both central banks proceed with anticipated cuts, relative economic performance and forward guidance may determine which currency bears greater pressure. Technical analysts note critical support levels around 1.0520-1.0530, with resistance emerging near 1.0620.
