• The EUR/USD twists as investors await rate momentum.
• Fed, ECB equally unlikely to shift on policy rates as quickly as markets hope for.
• One last appearance from ECB President Lagarde due on Friday.

The EUR/USD fell after facing a rejection from the 1.0900 handle on Thursday, declining to a near-term low of 1.0850 before recovering to the 1.0880 region as markets gear up for the Friday market session.

Policymakers from both the Federal Reserve (Fed) and the European Central Bank (ECB) have been working overtime trying to talk down market expectations of rate cuts that are increasingly unlikely to come as fast or as furious as investors have pinned their hopes on.

Atlanta Fed President Raphael Bostic hit newswires on Thursday noting that he doesn’t see the Fed moving on policy rates until Q3 at the absolute earliest assuming the inflation outlook continues at its current pace. The ECB remains firmly committed to avoiding being committed to anything specific, with the ECB’s latest Summary of Accounts finding that the central bank’s governing council remains skeptical that European inflation will bed down to the ECB’s 2% target before 2025.

ECB President Christine Lagarde gives one last appearance this week at the week-long World Economic Forum in Davos, Switzerland on Friday. ECB President Lagarde will be participating in a structured panel discussion titled “The Global Economic Outlook”. 

On the Greenback side, investors will be getting a fresh print of the University of Michigan’s Consumer Sentiment Index for January, which is expected to tick slightly higher from 69.7 to 70.0