EUR/USD steadies around 1.0300 as US Dollar remains subdued ahead of US CPI

• EUR/USD maintains its position following reports of the incoming Trump administration considering gradual tariff hikes.
• The US Dollar depreciated following the disappointing US December PPI data; CPI inflation data is due later on Wednesday.
• ECB officials continue to strengthen expectations of additional policy easing, fueled by the ongoing weak economic outlook in the Eurozone.

EUR/USD remains steady following recent gains registered in the previous session, trading around 1.0300 during the Asian hours on Wednesday. The pair received support as the market sentiment is improved due to recent reports about US President-elect Donald Trump's economic team considering a gradual increase in import tariffs boosted investor confidence, per Bloomberg.

The US Dollar Index (DXY), which measures the US Dollar’s performance against six major currencies, trades near 109.20. The Greenback faced challenges following the disappointing US December Producer Price Index (PPI) data. Market participants will keep an eye on the US Consumer Price Index (CPI) inflation data, which is due later on Wednesday.

US Producer Price Index for final demand rose 0.2% month-over-month in December after a 0.4% advance in November, softer than the 0.3% expected. The PPI climbed 3.3% YoY in December, the most since February 2023, after increasing 3.0% in November. This reading came in below the consensus of 3.4%.

The US Dollar may regain strength as hawkish sentiment builds around the Federal Reserve’s (Fed) policy outlook for January. According to the CME FedWatch tool, 30-day Fed Funds futures indicate a higher likelihood of just one interest rate cut from the Fed this year, contrasting with the two cuts projected in the Fed's latest dot plot from the Summary of Economic Projections (SEP).

The EUR/USD pair may face additional downward pressure as European Central Bank (ECB) officials continue to reinforce market expectations of further policy easing, driven by the Eurozone's weak economic outlook.

At a conference on Monday, ECB policymaker and Bank of Finland Governor Olli Rehn stated that he anticipates monetary policy will exit restrictive territory within the coming months, likely by “midsummer.”