17 Jan 2025

• EUR/USD trades in negative territory around 1.0290 in Friday’s early European session. 
• The ECB highlighted gradual rate cuts amid economic uncertainties. 
• Uncertainty over Trump's policies dampens prospects for Fed rate cuts despite easing US inflation.
• The EUR/USD pair has declined to approximately 1.0290 during the early hours of the European session on Friday. The anticipation of additional rate cuts by the European Central Bank (ECB) is exerting downward pressure on the Euro (EUR) against the US Dollar (USD). Market participants are looking forward to the release of the Eurozone Current Account and the Harmonized Index of Consumer Prices (HICP) later on Friday for new insights. Additionally, ECB board member Piero Cipollone is scheduled to deliver remarks on the same day.
  
  The ECB Monetary Policy Meeting Accounts published on Thursday indicated that policymakers reached a consensus last month to approach interest rate reductions with caution and a gradual strategy, while also acknowledging the possibility of further cuts.
  
  The ECB's next meeting is set for January 30, with investors fully anticipating a 25 basis points (bps) reduction. A Reuters poll conducted from January 10-15 revealed that all 77 economists surveyed expect the ECB to lower the Deposit Facility rate by 25 bps to 2.75% during the January meeting, with 60% predicting three additional 25-bps cuts by mid-year. Heightened expectations for further ECB rate reductions may exert additional pressure on the Euro in the short term.
  
  In the United States, the Federal Reserve's next monetary policy meeting is scheduled for January 28-29, with traders largely agreeing that the central bank will maintain current interest rates following a full percentage point cut in late 2024.
  
  Analysts suggest that the uncertainty surrounding potential fiscal, trade, immigration, and regulatory policies from the incoming Donald Trump administration could hinder the likelihood of Fed rate cuts, despite a decline in US inflation. This situation may bolster the US Dollar (USD) and create challenges for the EUR/USD pair.