The EUR/USD pair is testing its highest points in four months.

On Wednesday, the primary currency pair continues its upward trajectory, with the current EUR/USD exchange rate reaching 1.1041.

The currency market exhibits a subdued tone due to the ongoing festive season, evident in the noticeable absence of participants.

Simultaneously, anticipation is building regarding potential future interest rate cuts by the US Federal Reserve. The prevailing low liquidity levels are constraining significant fluctuations in currency rates.

According to insights from the CME FedWatch Tool, investors are placing the likelihood of an interest rate decrease commencing in March 2024 at 79%. Concurrently, the level of optimism is on the rise, projecting a total drop in borrowing costs by 153 basis points throughout the upcoming year.

This week unfolds in a relatively tranquil manner, reflective of the prevailing pre-New Year ambiance.

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