The EUR/USD pair extended its decline, staying below the 1.0400 mark as market sentiment remained cautious over the Federal Reserve’s hawkish outlook. Investors have scaled back expectations for rate cuts in 2024, reflecting the Fed’s commitment to controlling inflation despite recent signs of economic slowdown. This sentiment has bolstered demand for the dollar, pressuring the euro.
With inflation data still driving Fed policy, traders are adjusting portfolios to factor in a longer-than-expected period of elevated rates. The euro’s inability to break above 1.0400 underscores persistent headwinds from economic uncertainty in the Eurozone, further weighing on the currency’s performance. Market participants now await key data releases to assess whether the Fed’s stance will remain unchanged in early 2024.
