EUR/USD remains stable near 1.1770 during the early Asian session on Tuesday. US Pending Home Sales increased by 3.3% month-over-month last month, surpassing expectations. Market participants prepare for the FOMC Minutes on Tuesday in search of new insights. The EUR/USD pair remains stable around 1.1770 in the early Asian session on Tuesday. Market participants are factoring in the likelihood of additional rate cuts by the US Federal Reserve in 2026, subsequent to the 25-basis-point reduction announced during the December meeting. The upcoming release of the Federal Open Market Committee Minutes is set to capture significant attention later on Tuesday. The economic calendar appears sparse across most markets as we approach the New Year holiday.
Data released on Monday indicated that US Pending Home Sales increased by 3.3% month-over-month in November, following an upwardly revised gain of 2.4% in October. This figure exceeded the expectations of 1.0% and marked its highest level since February 2023. The Fed reduced the federal funds rate by 25 basis points during its December policy meeting, adjusting the target range to 3.50%-3.75%. The US central bank implemented a total of 75 basis points in rate cuts in 2025, responding to a softening labor market and a modestly high inflation rate.
The financial markets are currently reflecting approximately an 18.3% probability that the Federal Reserve will lower interest rates during its upcoming policy meeting in January, as indicated. The likelihood of a dovish stance from the Fed may exert downward pressure on the Greenback, potentially providing a favorable environment for the pair in the short term.
Recently, the European Central Bank maintained its interest rates and suggested that this status quo is expected to persist for the foreseeable future. ECB President Christine Lagarde stated that the central bank is unable to offer forward guidance on upcoming rate changes because of significant uncertainty, highlighting a data-driven, meeting-by-meeting strategy.