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The EUR/USD pair holds steady near 1.1770 during the early Asian session on Tuesday. Traders continue to price in the prospect of further rate cuts by the US Federal Reserve (Fed) in 2026, following the 25-basis-point rate reduction delivered at the December meeting. The release of the Federal Open Market Committee (FOMC) Minutes will be in the spotlight later on Tuesday. The economic calendar is thin in most markets ahead of the New Year holiday. 

Data released by the National Association of Realtors on Monday showed that the US Pending Home Sales rose 3.3% MoM in November after an upwardly revised 2.4% gain in October. This figure came in stronger than the expectations of 1.0% and registered its highest level since February 2023.

The Fed cut the federal funds rate by 25 basis points (bps) at its December policy meeting, bringing the target range to 3.50%-3.75%. The US central bank delivered a cumulative 75 bps of rate cuts in 2025 amidst a cooling labor market and slightly elevated inflation.  

Financial markets are pricing in nearly an 18.3% odds that the Fed will reduce the interest rates at its next policy meeting in January, according to the CME FedWatch tool. Firm Fed dovish bets could weigh on the Greenback and create a tailwind for the pair in the near term. 

Across the pond, the European Central Bank (ECB) held interest rates steady earlier this month and hinted they would likely remain so for some time. ECB President Christine Lagarde noted that the central bank cannot provide forward guidance on future rate moves due to high uncertainty, emphasizing a data-dependent, meeting-by-meeting approach.  

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