EUR/USD drops to near 1.0600, awaits US inflation data

EUR/USD may depreciate further as Trump’s potential fiscal policies could delay further Fed rate cuts.

The US Consumer Price Index is expected to show a 2.6% YoY increase for October.

Traders await Thursday’s release of pan-EU Gross Domestic Product data for the third quarter.

The EUR/USD pair remains under pressure on Wednesday, holding steady just above the 1.0600 level during Asian trading hours. This would mark the fourth consecutive day of losses for the Euro, as the pair continues to face downward momentum.

The primary factor contributing to the recent weakness in EUR/USD is the strength of the US Dollar (USD). The implementation of US President-elect Donald Trump’s proposed fiscal policies could stimulate investment, increase government spending, and bolster labor demand. However, this surge in economic activity could also fuel inflation risks.

On Tuesday, Minneapolis Fed President Neel Kashkari affirmed that the central bank remains confident in its ongoing battle against transitory inflation but cautioned that it is still too early to declare full victory. Kashkari also noted that the Fed would refrain from modeling the economic impact of Trump’s policies until there is greater clarity on the specifics of those policies.

Traders are now focused on the upcoming US inflation data release on Wednesday for further guidance on future US policy. The headline Consumer Price Index (CPI) is expected to show a 2.6% year-over-year increase for October, with the core CPI anticipated to rise by 3.3%.