Ella 
Early trading in Asia on Thursday. The EUR/USD currency pair is still facing resistance at the 1.0900 mark. The U.S. dollar (USD) strengthens, but EUR/USD still gains momentum. The European Central Bank (ECB) hawks resisted expectations of an early interest rate cut, providing some support for the euro (EUR). As of press time, EUR/USD was trading at 1.0893, up 0.12% on the day.
Some policymakers at the European Central Bank believe that inflation in the euro zone is still too high, and the ECB has pushed back against expectations of an early interest rate cut. ECB Governing Council member Bostjan Vasle said it was too early for the market to expect the ECB to cut interest rates for the first time at the beginning of the second quarter. Inflation levels must return to the 2% target before the direction of monetary policy can be changed, Wassler added.
While investors expect the ECB to stay on hold at its January meeting, market participants will be closely watching the press conference to confirm whether the Governing Council discussed a rate cut and the possible timing of the cut.
On the other hand, Federal Reserve Governor Christopher Waller said that an interest rate cut is possible this year, but the central bank should not rush to lower the benchmark interest rate until it is clear that low inflation will continue. Improved U.S. retail sales data on Wednesday reduced the likelihood of the Federal Reserve cutting interest rates. The rise in retail sales suggests the U.S. economy is stronger than previously expected, potentially delaying the need for an interest rate cut. This in turn boosts the US dollar overall and is negative for the EUR/USD currency pair.
Next, the European Central Bank will release the minutes of its latest meeting, and ECB President Christine Lagarde will also deliver a speech at the World Economic Forum (WEF) in Davos. In addition, U.S. housing starts, building permits, U.S. initial jobless claims last week and the Philadelphia Fed manufacturing index will be released later on Thursday.
