The EUR/USD pair remains steady around the 1.1660 mark in Friday’s Asian session, following three consecutive days of gains. The Euro could see further upside as the US Dollar (USD) weakens amid growing expectations of a Federal Reserve rate cut in September. According to the CME FedWatch tool, markets now price in a 93% chance of a 25 basis point (bps) rate cut next month—up sharply from just 48% a week ago.
The shift in sentiment comes after US labor data signaled a softening job market. Weekly Initial Jobless Claims rose to 226,000 for the week ending August 2, exceeding both the expected 221,000 and the prior week’s 218,000. This follows the July Nonfarm Payrolls report, which also pointed to a cooling labor landscape.
In political developments, President Donald Trump has nominated Stephen Miran, current Chair of the Council of Economic Advisors, to replace Adriana Kugler on the Federal Reserve Board of Governors. Additionally, Trump’s reported interest in replacing Fed Chair Jerome Powell has caught the market’s attention, with Fed Governor Christopher Waller emerging as a top contender for the role, according to Bloomberg.
On the European side, the Euro is finding support from expectations that the European Central Bank (ECB) will pause its easing cycle at the upcoming September meeting. Markets are pricing in an 87% probability that the ECB will hold rates steady, and see just a 60% chance of any further rate cuts before March 2026.
