The EUR/USD pair fell slightly as the Federal Reserve's less dovish stance and strong US GDP data supported the US dollar. The European Central Bank is expected to maintain a more dovish policy, potentially weighing on the Euro.
EUR/USD edged lower to 1.0360 in Friday’s early Asian session. The Fed’s cautious approach to easing and stronger US GDP data underpin the USD. The ECB may stay relatively dovish amid concerns over Eurozone economic growth. The EUR/USD pair trades with a mild negative bias around 1.0360 during the early Asian session on Friday.
The major pair remains on the defensive as the US Federal Reserve (Fed) adopted a less dovish stance despite cutting interest rates by 25 basis points (bps) at its December meeting on Wednesday. Later on Friday, the release of the US Core Personal Consumption Expenditures (PCE) Price Index data will be in the spotlight. The Fed decided to cut the interest rates at its final meeting of this year and signaled a much slower monetary policy easing trajectory in 2025. The Summary of Economic Projections, or ‘dot-plot,’ showed only two rate cuts in 2025, down from the four they projected in September. This, in turn, might provide some support to the Greenback in the near term and act as a headwind for the major pair. Additionally, stronger-than-expected US third quarter GDP data showed the US economy grew at a 3.1% annual rate. This reading came in above the market consensus and the previous reading of 2.8%. Across the pond, the European Central Bank (ECB) is anticipated to cut the interest rate further by at least a full percentage point next year. The more dovish ECB easing policy than that of the Fed is likely to weigh on the Euro (EUR) against the Greenback. Analysts expect that the ECB may have to accelerate rate cuts in 2025 amid the economic concerns in the Eurozone, political instability, and Trump tariff threats, which might contribute to the EUR’s downside
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