EUR/USD moves below 1.0300 due to dovish sentiment surrounding ECB, US Retail Sales eyed

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• EUR/USD struggles as the ECB could implement additional policy easing amid a weak economic outlook in the Eurozone.

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• The US Dollar depreciated as speculation grew that the Fed may implement two interest rate cuts this year.

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• US Retail Sales could increase by 0.6% month-over-month in December, against the previous 0.7% growth.

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EUR/USD extends losses for the second successive session, trading around 1.0280 during the Asian hours on Thursday. The EUR/USD pair faces downward pressure as European Central Bank (ECB) officials continue to reinforce market expectations of further policy easing, driven by the Eurozone's weak economic outlook.

At a conference on Monday, ECB policymaker and Bank of Finland Governor Olli Rehn stated that he anticipates monetary policy will exit restrictive territory within the coming months, likely by “midsummer.”

However, the EUR/USD pair gained ground as the US Dollar (USD) extended its decline following the cooler-than-expected US Consumer Price Index (CPI) inflation data for December, which heightened speculation that the US Federal Reserve (Fed) could implement two interest rate cuts this year.

The US CPI rose by 2.9% year-over-year in December, up from 2.7% in November, matching market expectations. The monthly CPI increased by 0.4%, following a 0.3% rise in November. US Core CPI, excluding volatile food and energy prices, increased by 3.2% annually in December, slightly below both the previous month's 3.3% and analysts' forecast of 3.3%. Core CPI edged up by 0.2% month-over-month in December 2024.

The Federal Reserve reported in its latest Beige Book survey, released on Wednesday, that economic activity saw slight to moderate growth across the twelve Federal Reserve Districts in late November and December. Consumer spending increased moderately, driven by strong holiday sales that surpassed expectations. However, manufacturing activity experienced a slight decline overall, as some manufacturers stockpiled inventories in anticipation of higher tariffs.