EUR/USD: Euro Shows Signs of Life as 2-Day Run Lifts Rate to $1.0420. What to Expect Next?

European currency wasn’t too excited to steal some pips from the dollar as traders barely added to their long positions on the major pair.

• The EURUSD pair was barely scraping through some pips early Monday after traders had previously added just enough momentum so it could claim victory over the dollar in the past two days. Not much action was seen, understandably so, as markets were largely taking a breather for Christmas. The low volume appears to have spilled into today’s early deals as the sluggish euro was mostly flat against the dollar, floating around $1.0420.
• Against this backdrop, the European currency doesn’t have much to hold on to heading into 2025. At least for now, the European Central Bank has vowed to cut interest rates at least twice over the next few meetings. It’s all in efforts to jump start a languishing economy that has been lacking any substantial growth this year. In contrast, the US economy has been a juggernaut in 2024, growing by 1.4%, 2.8% and 3.1% in the past three quarters. The numbers for the eurozone? 0.3%, 0.2%, 0.4%, respectively.
• The euro did have its 15 minutes of fame this year. By late September, it was flexing a 1.6% year-to-date rise against the dollar, floating at $1.12 (it’s also where euro bulls should’ve jumped ship). We all know what happened next. Donald Trump appeared as the knight in shining armor and promised absolute super growth for the US. His words echoed around the forex markets, giving the dollar a boost and crushing the euro to a year-to-date loss of 5.6%.