The EUR/USD pair is currently trading flat near 1.0990 in the early European session on Wednesday. Traders are cautious as they await the release of crucial economic data from both the Eurozone and the US. The upcoming releases of Eurozone Gross Domestic Product (GDP) for Q2 and US Consumer Price Index (CPI) for July are highly anticipated.
Recent data from the Bureau of Labor Statistics showed that the US Producer Price Index (PPI) for final demand rose by 2.2% year-on-year in July, falling short of market expectations. The softer-than-expected PPI numbers could have implications for future monetary policy decisions by the Federal Reserve (Fed).
Market analysts are predicting that the ECB may implement two more 25 basis point rate cuts later this year, based on surveys conducted by Reuters. This potential monetary policy action could impact the EUR/USD pair in the coming months.
Looking ahead, the markets are anticipating a 25 basis point rate cut by the Fed in September, with the possibility of a larger 50 basis point cut depending on economic data. The ECB’s rate cut expectations and Eurozone GDP growth projections for Q2 will also play a significant role in shaping the currency pair’s movements.
Overall, the economic data releases and central bank policies will be key drivers for the EUR/USD pair in the near term. Traders and investors should closely monitor these developments to make informed decisions in the forex market.