Ella 
In early Asian trading on Tuesday, the U.S. dollar strengthened, with EUR/USD falling to a multi-day low near 1.0870. The Federal Reserve’s (Fed) monetary policy meeting on Wednesday will be in focus, with the Fed expected to remain on hold. Meanwhile, continued caution in the market could boost USD/EUR. EUR/USD is currently trading around 1.0872, unchanged throughout the day.
Recent U.S. economic data show that U.S. inflation remains high, which increases market expectations that the Federal Reserve will start cutting interest rates in June. Federal Reserve Chairman Jerome Powell said two weeks ago that the central bank is not far away from feeling confident about cutting interest rates, and some Fed officials expect the first rate cut could happen later this year or in the summer.
The Federal Reserve will announce its interest rate decision on Wednesday and is expected to stabilize the benchmark interest rate at a range of 5.25%-5.50% at its March meeting. Investors see a nearly 73% chance of the Fed cutting interest rates in July, according to the CME Group’s FedWatch tool.
The ECB decided at its March meeting to keep borrowing costs at record highs. In other words, central bank policymakers still signaled progress in easing inflation and began discussing interest rate cuts. ECB Governing Council member Pablo Hernandez de Cos said the central bank could start cutting interest rates in June if euro zone inflation continues to fall. Meanwhile, European Central Bank policymaker Mario Centeno said lower borrowing costs would help prevent a recession in the euro zone.
In addition, ECB Governing Council member Claes Nott set the date for the first interest rate cut in June and expected the ECB to introduce three interest rate cuts this year, while ECB President Christine Lagarde said, After the European Central Bank lowered its inflation forecast and predicted that inflation will reach its 2% target in 2025, June may be the earliest time to cut interest rates.
