The EUR/USD pair is trading in positive territory near 1.1525 early Monday in Europe. The US Dollar (USD) is softening against the Euro (EUR) as expectations for a Federal Reserve (Fed) rate cut continue to rise. Traders are now looking ahead to Tuesday’s US data releases, including the September Producer Price Index (PPI) and Retail Sales.
Dovish comments from New York Fed President John Williams boosted speculation of a December rate cut, pressuring the Greenback. Williams said Friday that he expects the Fed to lower interest rates from current levels, warning that labor market weakness now poses a greater risk than inflation. According to the CME FedWatch Tool, the probability of a December rate cut has surged to 70%, up sharply from 40% a week earlier.
Meanwhile, remarks from other Fed officials took a more cautious tone. Boston Fed President Susan Collins said she would maintain a “high bar” for supporting additional rate cuts, while Dallas Fed President Lorie Logan noted that without clear evidence justifying further easing, keeping rates steady would help the FOMC better assess current policy’s restrictive impact.
On the Eurozone side, the European Central Bank (ECB) is widely expected to keep rates unchanged through late 2025 and possibly into 2026, following its decision to hold rates steady in October. A November Reuters poll of economists reinforced this outlook, pointing to stable economic conditions and contained inflation.
ECB President Christine Lagarde emphasized Friday that the central bank remains vigilant on inflation risks and will adjust policy if needed to ensure inflation returns to the 2% target. The ECB’s cautious but steady stance is likely to continue supporting the Euro in the near term.
