EUR/USD edges slightly lower after a three-day winning streak, trading near 1.1590 during Friday’s Asian session. The pair softens as the US Dollar (USD) stabilizes following consecutive declines. However, the Greenback’s recovery may be limited as expectations of a Federal Reserve (Fed) rate cut continue to build.
The CME FedWatch Tool now reflects an 87% probability of a 25 bps cut at the December policy meeting—up sharply from just 39% a week ago. Markets are also pricing in three more rate cuts by the end of 2026.
Rate-cut expectations strengthened after reports suggested White House National Economic Council Director Kevin Hassett is the frontrunner to become the next Fed Chair. Investors perceive Hassett as supportive of President Donald Trump’s push for lower interest rates.
On the European side, EUR/USD may find additional support after the release of the European Central Bank (ECB) Minutes. Policymakers largely favored maintaining current rates amid lingering uncertainty, with some indicating that no further easing may be necessary. The Governing Council judged monetary policy to be “in a good place,” supported by steady growth and inflation moving closer to target.
Several members also argued that the rate-cut cycle may have run its course, as both the economic and inflation outlook remain broadly in line with the ECB’s September projections and current positive conditions.
