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EUR/USD extends its winning streak for the third successive session, trading around 1.1580 during the Asian hours on Wednesday. The pair is gaining as the US Dollar (USD) comes under pressure, with softer United States (US) economic data boosting expectations of a Federal Reserve (Fed) rate cut in December.

The CME FedWatch Tool suggests that markets are now pricing in more than 84% odds that the Fed will cut its benchmark overnight borrowing rate by 25 basis points (bps) at its December meeting, up from 50% probability that markets priced a week ago.

The US Census Bureau released US Retail Sales on Tuesday, which rose by 0.2% month-over-month (MoM) in September, slowing from the 0.6% increase seen in August, indicating more cautious consumer spending. Retail Sales Control Group declined 0.1%, against the expectations of a 0.3% rise and the previous 0.6% growth. Separately, the Conference Board reported a sharp deterioration in household sentiment, with Consumer Confidence sliding 6.8 points to 88.7 in November from 95.5 in October.

The US Producer Price Index (PPI) remained steady at 2.7% year-over-year in September, matching expectations and August’s reading and suggesting that inflationary pressures have stabilized. Core PPI eased to 2.6% from 2.9%, undershooting forecasts of 2.7%.

Additionally, the EUR/USD pair gains ground as the Euro (EUR) draws support from cautious sentiment surrounding the European Central Bank (ECB) policy outlook. Traders expect the central bank to keep interest rates unchanged throughout 2026, citing a resilient economy and inflation near target.

ECB Governor and Deutsche Bundesbank President Joachim Nagel said on Monday that the central bank is also monitoring the strong rise in service prices, noting that December projections will offer clearer insight into whether the current monetary policy stance remains appropriate.

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