The EUR/USD pair continues to rise, reaching around 1.1030 during Monday’s Asian trading session. This upward movement can be attributed to the increasing likelihood of a rate cut by the US Federal Reserve (Fed) starting in September.
Recent US economic data showed that Retail Sales exceeded expectations, while both the Producer Price Index (PPI) and Consumer Price Index (CPI) indicated a decrease in inflation. Additionally, US housing starts fell by 6.8% in July, raising concerns about the economy’s strength in the face of softer inflation and labor reports.
San Francisco Fed President Mary Daly emphasized the need for a gradual approach to reducing borrowing costs, pushing back against concerns of a sharp economic slowdown. Chicago Fed President Austan Goolsbee also warned about the risks of maintaining high interest rates for too long.
On the Eurozone side, investors are anticipating a gradual reduction in interest rates by the European Central Bank (ECB). ECB policymakers have not committed to a specific rate-cut path out of concerns that inflation could pick up again.
Analysis:
The EUR/USD pair is on the rise due to dovish comments from Fed officials and expectations of a rate cut. This could impact global markets and investor sentiment. As the Euro gains support, investors should monitor economic indicators and central bank policies for potential trading opportunities.