EUR/USD is edging lower around 1.1590 in Friday’s Asian session, pausing after three straight days of gains as the US Dollar stabilizes. The Greenback is attempting to recover from recent losses, though its upside remains limited by mounting expectations of a Federal Reserve rate cut in December.
Fed expectations tilt dovish
According to the CME FedWatch Tool, markets now assign more than an 87% probability to a 25 bps rate cut at the December meeting—up sharply from just 39% a week ago. Traders are also pricing in three additional rate cuts by the end of 2026.
These expectations have gained traction following reports that Kevin Hassett, Director of the White House National Economic Council, has emerged as the frontrunner to become the next Fed Chair. Market participants widely view Hassett as supportive of President Donald Trump’s push for lower interest rates, reinforcing the dovish narrative.
ECB minutes offer additional support for the euro
EUR/USD may find a degree of resilience from this week’s ECB Minutes, which showed policymakers broadly favored holding rates steady amid ongoing economic uncertainty. Some members even suggested that further easing may not be required.
The Governing Council noted that policy remains “in a good place,” supported by stable growth and inflation nearing target.
A number of policymakers argued the rate-cut cycle may already be complete, citing that both economic and inflation trends remain consistent with the ECB’s September projections. These factors collectively help limit downside pressure on the euro and keep the broader EUR/USD bias tilted slightly to the upside.
