Ella 
The euro/dollar rose in Asia on Wednesday, recouping some of the previous day’s losses to a more than one-month low. EUR/USD is currently edging higher towards around 1.0880, although the fundamental backdrop favors bearish traders and suggests minimal downside resistance.
ECB policymakers have different views on inflation and interest rates, making it difficult to attract bulls when the timing of interest rate cuts is uncertain. In fact, Bundesbank President Joachim Nagel said on Monday
It is too early for the European Central Bank to discuss cutting interest rates because inflation remains high. In contrast, ECB Governing Council member Tuomas Valimaki said on Tuesday that he was more inclined to cut interest rates earlier than most of his colleagues. This, coupled with the maintenance of underlying bullish sentiment in the US dollar, validates the short-term bearish outlook for EUR/USD.
The U.S. dollar index (DXY), which tracks the greenback’s performance against a basket of currencies, is near its highest level since Dec. 13 and continues to be supported by reduced bets that the Federal Reserve will cut interest rates sooner. Against the backdrop of slightly warmer U.S. consumer inflation data last week, Federal Reserve Governor Christopher Waller said on Tuesday that the U.S. central bank needs to be cautious and not rush to cut interest rates because the economy is still in good shape. This is still supportive of the rise in U.S. bond yields, and the rise in U.S. bond yields coupled with the softening of the risk tone has provided a “tailwind” for the safe-haven currency, the U.S. dollar, and put pressure on EUR/USD.
