The EUR/USD pair is treading water, anticipating forthcoming developments.

The primary currency pair is experiencing moderate gains on Tuesday, with investors predominantly adopting a cautious stance. The current EUR/USD exchange rate is at 1.0895.

Limited statistical releases have directed the market's attention towards the euro, prompting speculation about the European Central Bank's (ECB) future actions. Since the start of the year, the EUR's exchange rate against the US dollar has witnessed a 1.3% decline.

The ECB meeting scheduled for Thursday poses the main risk for the EUR this week. Expectations lean towards no surprises, as monetary policymakers at the European Central Bank have recently presented their average forecasts for economic and political developments. Notably, there is a clear resistance to prematurely lowering the interest rate.

Market anticipations suggest a potential 20-basis-point interest rate reduction by April and a 40-basis-point reduction by June. However, the prevailing price environment does not align with the ECB's objectives.

It is crucial to note that the ECB is likely to take cues from the Federal Reserve, allowing the US Central Bank to lead the way in easing monetary conditions.

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