- EUR/USD falls near 1.0530 as investors await key events including US inflation and the ECB policy meeting.
- The ECB is widely anticipated to cut its Deposit Rate by 25 bps to 3% on Thursday.
- Economists expect the US annual core CPI to have grown steadily at 3.3% in November.
EUR/USD falls near 1.0530 in the European session on Tuesday, as investors remain cautious ahead of the European Central Bank (ECB) monetary policy meeting, which will be announced on Thursday. Operators have discounted a 25 basis point (bps) reduction in the Deposit Rate to 3%. This would be the third consecutive rate cut decision by the ECB.
Market experts assume that a number of factors, including Donald Trump’s victory in the United States (US) presidential election, political turmoil in France and Germany, and a sharp slowdown in Eurozone business activity , forced financial market participants to consider a rate cut at Thursday’s policy meeting.
The fall of the government in France and instability in Germany and France could have a direct impact on the economic growth of the Eurozone, which will weigh on price pressures, since these two are the largest economies in the trading bloc. The impact of Trump’s tariffs on Eurozone inflation when he takes office is still uncertain.
ECB policymakers are divided over whether the impact of Trump’s tariffs will be inflationary or deflationary for the Eurozone economy. A handful of ECB policymakers assume that Trump’s tariffs will significantly weaken the Euro (EUR) against the USD, a scenario that will make imports more expensive for individuals and increase price pressures. Conversely, some officials forecast risks that inflation will fall short of the bank’s target, as higher tariffs will hit the Eurozone’s export sector.
What’s moving the market today: EUR/USD falls ahead of US inflation
- EUR/USD falls while the US Dollar (USD) rises, with investors awaiting the release of US Consumer Price Index (CPI) data for November, which is scheduled for Wednesday. The inflation report is expected to show that the annual headline CPI rose at a faster pace of 2.7% from the previous release of 2.6%. The core CPI – which excludes volatile food and energy prices – is expected to rise steadily by 3.3%.
- Inflation data is less likely to influence the Federal Reserve’s (Fed) interest rate expectations for the December 18 policy meeting unless the data deviates significantly from expectations.
- According to the CME FedWatch tool, the probability of the Fed reducing interest rates by 25 bps to the 4.25%-4.50% range is almost 90%. Macquarie analysts agree with market expectations for the Fed’s rate cut next week, but expect the central bank to deliver slightly hawkish rate guidance.
- “The recent slowdown in the pace of disinflation in the US, a lower unemployment rate than the Fed projected in September, and exuberance in US financial markets are contributing to this tougher stance. ,” Macquarie analysts said.
Technical Analysis: EUR/USD faces pressure near 20-day EMA
EUR/USD teeters above the psychological figure of 1.0500. The outlook for the major currency pair remains bearish as the 20-day EMA near 1.0573 acts as key resistance for Euro (EUR) bulls.
The 14-day Relative Strength Index (RSI) rebounded after conditions turned oversold and rose above 40.00, suggesting that the bearish momentum has faded. However, the broader downtrend for the pair does not appear to be over yet.
Looking down, the Nov 22 low of 1.0330 will be key support. On the other hand, the 50-day EMA near 1.0700 will be the key barrier for the Euro bulls.
Economic indicator
Decision on ECB deposit rates
The deposit rate, announced by the European Central Bankis the interest rate paid on excess liquidity that credit institutions can deposit overnight in an account of a national central bank that is part of the Eurosystem.
Next post: Thu Dec 12, 2024 1:15 PM
Frequency: Irregular
Dear: 3%
Previous: 3.25%
Fountain: European Central Bank
Source: Fx Street

I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.