Ella 
In early Asian trading on Thursday, EUR/USD continued its gains and broke through the psychological mark of 1.1100. USD weakness has provided some support for EUR/USD. As of press time, EUR/USD was trading at 1.1109, up 0.03% on the day. Markets are likely to be quiet this week as traders enter holiday mode.
News that the Federal Reserve (Fed) may cut interest rates next year continued to support the EUR/USD rebound and pushed the euro to its highest point since July. Evidence of falling inflation could help convince policymakers to cut interest rates next year, even if Fed officials have been hesitant before declaring victory. Investors expect the Fed to remain on hold at its upcoming January meeting and are fully pricing in rate cuts next March and in May 2024, according to the CME FedWatch tool.
On the euro front, European Central Bank President Christine Lagarde made quite hawkish remarks at a recent press conference. Lagarde hit back at market expectations for an interest rate cut, saying that inflationary pressures in the euro area have fallen back in line with expectations, but wage growth remains strong and the outlook is particularly uncertain. Lagarde also said that the European Central Bank should not lower the warning line and that the central bank’s policy decisions depend on economic data and are not affected by market pricing or time constraints.
Traders will keep a close eye on Thursday’s U.S. jobless claims data for last week, the trade balance and November existing home sales report. Amid thin holiday trading, market risk sentiment and continued central bank policy adjustments are expected to continue to affect EUR/USD fluctuations.
