EUR/USD slides to 1.0605 as Fed rate cut expectations diminish

EUR/USD extended its decline for a second consecutive session on Monday, falling 0.15% to trade near 1.0605 as the US dollar strengthened amid shifting Federal Reserve policy expectations. The bearish momentum reflects growing market skepticism about aggressive Fed rate cuts in 2024, with traders now pricing in fewer reductions following resilient US economic data. The euro's weakness has been compounded by contrasting monetary policy outlooks, as the European Central Bank maintains a more dovish stance compared to the Fed's data-dependent approach. Technical analysis shows the pair testing support at the 1.0600 psychological level, with the next significant support at 1.0580 (November low). Resistance is evident at 1.0630, followed by the 1.0650 area. The bearish bias remains intact as long as the pair trades below the 1.0650 resistance zone. Traders await Tuesday's Eurozone inflation data and US retail sales figures for potential catalysts that could either reinforce or challenge the current downtrend.