No significant events are expected today.

The EUR/USD pair is recovering some of the losses from the previous session, trading near 1.0280 during Asian hours. However, its growth may remain limited as the US dollar (USD) could strengthen due to market caution ahead of the inauguration of President-elect Donald Trump, set to take place later today. US markets will remain closed on Monday in observance of Martin Luther King Jr. Day.

Concerns about Trump’s political promises, such as imposing tariffs, extending tax cuts, and deporting undocumented immigrants, have driven an increase in US Treasury yields and supported the dollar ahead of his assumption of office. Analysts believe the future trajectory of Federal Reserve (Fed) interest rates will depend on the extent to which Trump’s administration implements these measures.

Investors will closely monitor Trump’s planned executive orders, which are expected to be unveiled shortly after his inauguration. Meanwhile, the Fed is anticipated to keep interest rates unchanged at its January meeting, with most economists surveyed by Reuters predicting rate hikes to resume in March.

The euro (EUR) is facing challenges amid continued dovish expectations regarding the European Central Bank (ECB). Markets predict a 25-basis-point (bp) rate cut at each of the next four ECB meetings, reflecting concerns about the Eurozone’s economic outlook and expectations that inflationary pressures will remain under control.

Minutes from the ECB’s December meeting, released last week, indicate that policymakers are more focused on the pace of easing this year rather than pausing or ending the rate-cutting cycle. In particular, officials discussed the possibility of a larger-than-usual 50 bp cut to guard against downside risks to growth, which are exacerbated by both global and domestic political uncertainties.

Recommendations: Watch the 1.0300 level; if the pair consolidates above, consider Buy positions. If it bounces back, consider Sell positions.