Key events today:

15:00 UTC: USD – ISM Manufacturing Index.

The EUR/USD pair faces some pressure at the 1.0530 level amid a strengthening US Dollar (USD) during the early Asian trading hours on Monday. Investors will closely watch the speech by European Central Bank (ECB) President Christine Lagarde and the release of the US ISM Manufacturing PMI later on Monday.

Eurozone inflation, measured by the Harmonized Index of Consumer Prices (HICP), rose to 2.3% year-on-year in November from 2.0% in October, aligning with market expectations. This figure exceeded the ECB’s target of 2.0%. Meanwhile, core HICP increased to 2.8% year-on-year in November from 2.7% in the previous reading, also meeting forecasts.

Market participants anticipate a 25 basis points (bps) rate cut by the ECB in December, which would mark the fourth cut this year. However, expectations for a substantial 50 bps cut have declined since last month due to a slight upward revision in the Eurozone’s economic growth forecast. The prospect of a December rate cut by the ECB continues to weigh on the Euro (EUR).

On the other hand, the cautious stance of the US Federal Reserve (Fed) could keep supporting the US Dollar. According to the CME FedWatch Tool, the probability of a 25 bps rate cut by the Fed in December stands at nearly 65.4%.

Recommendations: Watch the 1.0530 level closely. Consider Sell positions if the price breaks below, or Buy positions if it rebounds.