Euro trends new daily low

The EUR/USD pair loses traction following an early uptick to the 1.0800 mark, or over a one-week high on Monday and drops to a fresh daily low during the first half of the European session.

 Spot prices, however, recover a few pips in the last hour and remain at the mercy of the US Dollar (USD) price dynamics. Growing acceptance that the Federal Reserve (Fed) will keep interest rates higher for longer continues to act as a tailwind for the Greenback.

That said, the uncertainty over the likely timing and pace of Fed rate cuts in 2024 hold back the USD bulls from placing aggressive bets.

Apart from this, the underlying bullish sentiment across the global equity markets turns out to be another factor capping gains for the safe-haven buck and acts as a tailwind for the EUR/USD pair.

The upside for the shared currency, meanwhile, remains capped in the wake of rising bets that the European Central Bank (ECB) will start cutting interest rates at the start of the second quarter. Investors might also prefer to move to the sidelines and wait for the release of the latest US consumer inflation figures on Tuesday before positioning for the next leg of a directional move for the currency pair.