The EUR/USD pair is maintaining its position above the crucial support level of 1.1000 as investors anticipate a potential interest rate cut by the Federal Reserve in September. This comes after the US Consumer Price Index (CPI) data for July showed moderate growth, reassuring investors that inflation is on track to reach the Fed’s target of 2%.
On the US front, the Fed is expected to ease its monetary policy stance, which has been restrictive since March 2022. This shift in policy is likely to support risky assets, as indicated by gains in S&P 500 futures. The US Dollar Index (DXY) is also hovering above its weekly low, reflecting market sentiment favoring riskier assets.
Looking ahead, investors are awaiting the US Retail Sales data for July, which is a key indicator of consumer spending. In the Eurozone, the Euro (EUR) remains strong as investors anticipate a cautious approach from the European Central Bank (ECB) regarding interest rate cuts.
US Dollar FAQs
The US Dollar (USD) is the most traded currency globally, with a significant impact on its value determined by the Federal Reserve’s monetary policy. The Fed adjusts interest rates to achieve price stability and full employment, influencing the USD value. In extreme cases, the Fed may resort to quantitative easing (QE) to boost credit flow, weakening the USD, or quantitative tightening (QT) to strengthen the currency.