EUR/USD is showing strength near 1.1130 as investors await the release of the FOMC minutes from the Fed’s July monetary policy meeting. The Fed kept interest rates steady in July but discussions about potential cuts have been acknowledged by Jerome Powell. On the other hand, the ECB is expected to resume its policy-easing cycle in September.
With the US Dollar under pressure and the Euro performing strongly, the major currency pair is aiming to revisit 2024 highs of 1.1140. The growing optimism over Fed interest rate cuts in September has contributed to the USD weakness, with the US Dollar Index hovering near a seven-month low at around 101.30.
Investors are anticipating a potential interest rate reduction by the Fed in September, with expectations split between a 50-basis-point cut and a 25-basis-point cut. The FOMC minutes from the July meeting, set to be published at 18:00 GMT, will provide further insights into the Fed’s outlook.
Looking ahead, all eyes will be on Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium, where fresh cues about rate cuts in September are expected. Powell’s comments after the July meeting hinted at the possibility of a rate cut if inflation trends remain in line with expectations and the labor market conditions remain stable.
Analysis and Outlook
The EUR/USD pair is currently positioned near key resistance levels and is likely to continue its upward momentum if the Fed signals a rate cut in September. A breakout above 1.1140 could open the door for further gains towards the 1.1200 level, while a pullback to 1.0950 could provide strong support.
Overall, the market sentiment is leaning towards a dovish stance from both the Fed and the ECB, which could support the Euro against the US Dollar in the near term. Investors should closely monitor upcoming economic data releases and central bank announcements for further direction in the EUR/USD pair.