The EUR/USD pair is trading steady around 1.1700 during Thursday’s Asian session, pausing after two consecutive days of losses as the US Dollar (USD) stages a mild technical rebound. Market attention is now on the Eurozone’s second-quarter Gross Domestic Product (GDP) figures, set for release later today, followed by the US Producer Price Index (PPI) and weekly Initial Jobless Claims in the North American session.
Despite the current stability, the Greenback’s upside could be capped amid growing expectations for further interest rate cuts by the US Federal Reserve (Fed). According to the CME FedWatch Tool, markets are pricing in a 94% probability of a 25 basis point rate cut at the Fed’s September meeting.
US Treasury Secretary Scott Bessent, in a Wednesday interview, suggested that short-term rates should be 1.5–1.75% lower than the current effective benchmark rate of 4.33%. He also noted there is a strong possibility of a larger 50 basis point cut in September. Echoing similar views, US President Donald Trump said his “paper calculation” shows rates should be near 1%, suggesting they should be reduced by three to four percentage points.
On the Euro side, sentiment improved as traders anticipate the European Central Bank (ECB) will conclude its year-long easing cycle in July, after delivering eight cuts that brought borrowing costs to their lowest since November 2022. However, markets are still factoring in the likelihood of one more rate reduction before year-end.
