EUR/USD trades cautiously with ECB policy taking center stage.

EUR/USD stays below 1.0900 as the ECB is expected to cut its borrowing rates by 25 bps on Thursday.
Increasing speculation for Donald Trump’s victory in the US presidential elections has dampened the Eurozone’s economic outlook.
Fed’s Waller advised a gradual reduction of interest rates over the next year.

EUR/USD trades quietly below 1.0900 in Wednesday’s North American session. The major currency pair trades sideways as investors turn cautious ahead of the European Central Bank’s (ECB) policy meeting, which will be announced on Thursday.

The ECB is widely anticipated to reduce its Rate on Deposit Facility by 25 basis points (bps) to 3.25%. This would be the second straight interest rate cut by the ECB in a row. With strong confidence that the ECB will cut interest rates tomorrow, investors will pay close attention to the monetary policy statement and ECB President Christine Lagarde’s press conference to get fresh cues on the interest rate outlook.

The comments from Lagarde are expected to be dovish as price pressures in the Eurozone appear to be under control, and fears of an economic slowdown have grown significantly. According to the preliminary estimates, the Eurozone Harmonized Index of Consumer Prices (HICP) decelerated to 1.8% in September. Meanwhile, the second estimate for the monthly Consumer Price Index (CPI) (EU Norm) in France and Italy has shown that price pressures were slower than preliminary expectations.

Growing speculation about former US President Donald Trump winning the United States (US) presidential elections has also raised concerns over the European Union’s (EU) export outlook. Trump’s victory is expected to result in tariff hikes on automotive imports to the US, which could dent exports from the old continent and lead to more weakness in economic growth.