EUR/USD Remains Below 1.0900; Attention Is Directed Around Lagarde's Speech And US Data

During Thursday's early Asian trading hours, the EUR/USD pair stays limited below the 1.0900 barrier. The US dollar (USD) is stronger, but the key pair still gains momentum. The Euro (EUR) has gained some support as the European Central Bank (ECB) hawks have resisted calls for an early rate decrease. As of this writing, the EUR/USD pair is up 0.12% on the day, trading at 1.0893.

A few policymakers at the European Central Bank (ECB) have refuted predictions of an early rate decrease, arguing that inflation in the Euro region is still too high. It is too soon to anticipate the first rate decreases at the start of the second quarter, according to ECB Governing Council member Bostjan Vasle. Vasle continued, saying that in order to alter monetary policy, inflation needs to return to the 2% objective.

Market participants will be attentively watching the news conference for any confirmation on whether the Governing Council considered rate reduction and the possible timing of such cuts, even though investors do not expect any change in the ECB policy at its January meeting.

However, Federal Reserve (Fed) Governor Christopher Waller stated that while interest rate reductions are expected this year, the central bank shouldn't drop its benchmark rate just yet; rather, it should wait until it is certain that lower inflation will persist. The likelihood of a rate cut by the Fed has decreased following Wednesday's positive US retail sales statistics. The economy is doing better than anticipated, as seen by the rise in retail sales, which may postpone the need for rate decreases. Consequently, this strengthens the US dollar generally and works against the EUR/USD pair.

Next, the European Central Bank (ECB) will present its current meeting's accounts, and Christine Lagarde will give a speech at the World Economic Forum (WEF) in Davos. Also on Thursday, there will be releases of the US Housing Starts, Building Permits, Weekly Initial Claims, and Philly Fed Manufacturing Index.