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• EUR/USD softens to near 1.0400 in Tuesday’s early Asian session. 
• The Fed sees fewer interest rate cuts in 2025 amid a slowdown in the disinflation process. 
• ECB’s Lagarde said the Eurozone inflation was getting "very close" to reaching 2% in the near term. 

The EUR/USD pair trades with mild losses around 1.0400 during the early Asian session on Tuesday. The expectation that the US Federal Reserve (Fed) will deliver fewer rate cuts in 2025 provides some support for the Greenback. Trading volumes are likely to be low ahead of the holiday trading week.

A renewed "higher for longer" policy approach by the Fed will hang over the final trading days of the year, which might lift the US Dollar (USD) broadly. The US central bank lowered its benchmark interest rate by another quarter point last week. According to the latest quarterly dot plot, the Fed committee has dialed back its expectations for rate reductions in 2025 and beyond. The Fed now predicts just a 50 basis points (bps) reduction or two rate cuts, down from four quarter-point cuts. 

Across the pond, the Euro (EUR) weakens amid rising bets of further rate reduction by the European Central Bank (ECB). The ECB President Christine Lagarde said on Monday that the Eurozone was getting "very close" to reaching the ECB's medium-term inflation target, per the Financial Times on Monday. Lagarde further stated that the central bank would cut interest rates further if inflation continued to ease towards its 2% goal, as curbing growth was no longer necessary.

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