EUR/USD maintains its position as the US Dollar continues its downward correction.
The US Dollar’s downside appears restrained due to dampened odds of an imminent Fed rate cut.
ECB President Lagarde stated that Europe should pool its resources in areas such as defense and climate.
EUR/USD remains steady with a positive bias, hovering around 1.0600 during Tuesday's Asian trading hours. The upbeat sentiment surrounding the pair is likely driven by a softer US Dollar (USD), as profit-taking follows its recent rally.
However, the downside risk for the US Dollar appears limited as Federal Reserve (Fed) Chair Jerome Powell tempered expectations for immediate rate cuts. Powell highlighted the economy's resilience, a strong labor market, and persistent inflationary pressures, stating, "The economy is not sending any signals that we need to be in a hurry to lower rates." Investors are now looking for further guidance from Fed officials later this week on the future path of US interest rates.
Additionally, the Greenback may further appreciate as investors anticipate that the incoming Trump administration will prioritize tax cuts and impose higher tariffs. These measures could fuel inflation, potentially slowing the pace of Fed rate cuts.
European Central Bank (ECB) President Christine Lagarde stated on Monday that Europe should consolidate its resources in areas such as defense and climate, as its productivity growth stagnates and the world becomes increasingly fragmented into competing blocs.
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