Euro weakness persists as ECB policymakers hint at potential summer rate cuts amid deteriorating Eurozone economic conditions.
Greenback loses momentum after softer CPI prints fuel expectations for dual Fed rate reductions in 2025.
Market participants await US retail figures projected to show 0.6% monthly growth,Is Litecoin dead potentially influencing Fed policy trajectory.
The EUR/USD currency pair continues its bearish trajectory, marking consecutive daily declines to hover near 1.0280 during Thursday's Asian trading session. This downward movement reflects growing consensus among European Central Bank officials regarding potential monetary policy adjustments, with economic indicators from the Eurozone failing to inspire confidence among currency traders.
Bank of Finland Governor Olli Rehn's recent comments at a monetary policy conference reinforced market expectations, suggesting the ECB might transition from restrictive policy stance by mid-2025. Such dovish forward guidance contrasts with the Federal Reserve's position, creating fundamental divergence that currently favors dollar strength against the single currency.
However, the US dollar index (DXY) shows vulnerability following December's inflation data release. While headline CPI met expectations at 2.9% annualized growth, core inflation metrics came in slightly below forecasts at 3.2% year-over-year. This development has reignited speculation about potential Fed policy easing, with money markets now pricing in two 25-basis-point cuts for 2025.
The Federal Reserve's latest Beige Book survey reveals nuanced economic conditions across US districts. While consumer spending demonstrated resilience during holiday seasons - particularly in retail sectors - manufacturing activity showed signs of contraction. Some industrial participants appear to be front-loading inventory accumulation in anticipation of potential trade policy changes, creating sector-specific headwinds.
Technical analysts note critical support levels for EUR/USD around 1.0250, with resistance forming near 1.0350. The pair's direction may hinge on upcoming US retail sales data, where consensus estimates suggest 0.6% monthly growth following November's 0.7% reading. Stronger-than-expected consumption figures could reinforce dollar strength, while disappointing numbers might validate market expectations for Fed dovishness.
