EUR/USD depreciates to yearly lows near 1.0450, awaits PMIs from both nations

• EUR/USD continues to lose ground as the US Dollar appreciates due to the increasing likelihood of slower Fed rate cuts.
• The Euro weakens as the ECB is anticipated to reduce Deposit Facility Rate by 25 basis points in December.
• The US Dollar Index hovers near its recent yearly high of 107.15, which was recorded on Thursday.

EUR/USD remains on a downward trend for the third consecutive session, hovering around 1.0470 during the Asian trading hours on Friday. The pair dropped to a low of 1.0462 on Thursday, a level not seen since October 2023. This decline is driven by the Euro's weakness, fueled by expectations that the European Central Bank (ECB) may speed up its policy easing.

The ECB is broadly expected to reduce its Deposit Facility Rate by 25 basis points (bps) to 3% during its December meeting. Market participants also anticipate that the ECB will move toward a neutral policy stance more rapidly in 2025, amid growing concerns about the Eurozone's economic outlook.

Traders are awaiting the release of the Eurozone HCOB Purchasing Managers Index (PMI) data for November on Friday. The Pan-EU Manufacturing PMI is expected to remain flat at a contractionary 46.0, while the Services PMI is projected to rise slightly to 51.8 from 51.6.

Attention will then shift to the US S&P Global PMI data, set to be released later in the North American session. The US Manufacturing PMI for November is forecast to increase to 48.8 from 48.5, while the Services PMI is expected to rise to 55.3 from 55.0.

The US Dollar Index (DXY), which measures the USD against a basket of major currencies, trades near 107.00, just below its recent yearly high of 107.15 reached on Thursday. The US Dollar gained strength following the release of last week's Initial Jobless Claims data.

US Jobless Claims dropped to 213,000 for the week ending November 15, down from a revised 219,000 (previously 217,000) in the prior week and below the forecast of 220,000. This development has sparked speculation that the pace of Federal Reserve rate cuts could slow.