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- EUR/USD edges higher to around 1.1645 in Tuesday’s early European session.
- The US central bank is expected to deliver a rate cut on Wednesday.
- Germany’s Industrial Production came in stronger than expected in October.
The EUR/USD pair gains ground to near 1.1645 during the early European session on Tuesday. The prospect of a US interest rate cut on Wednesday weighs on the US Dollar (USD) against the Euro (EUR). Traders will keep an eye on the US ADP Employment Change four-week average and Jolts Job Openings reports for September and October later on Tuesday.
The US Federal Reserve (Fed) is widely expected to cut interest rates by 25 basis points (bps) at the conclusion of its final 2025 policy meeting on Wednesday. This move would bring the federal funds rate to 3.50% to 3.75%. According to the CME FedWatch tool, financial markets are now pricing in nearly a 90% odds of a quarter-point rate reduction.
Traders will closely watch the Fed Chair Powell’s press conference and the updated Summary of Economic Projections (SEP), or “dot plot,” as it might offer some hints about the US interest rate path. However, many analysts anticipate a “hawkish cut” at the December meeting, which could lift the Greenback and create a headwind for the major pair.
Across the pond, the upbeat economic data from Germany and the Eurozone could provide some support to the shared currency. Germany’s Industrial Production climbed by 1.8% MoM in October, versus an increase of 1.3% prior, Destatis showed on Monday. This figure came in above the market consensus of a 0.4% decline. Meanwhile, the Eurozone’s Sentix Investor Confidence improved to -6.2 in December from -7.4 in November.
