EUR/USD extends its decline for a fourth consecutive session, trading near 1.1660 during Asian hours on Friday. Investors are awaiting Germany’s July Retail Sales and the flash Consumer Price Index (CPI) report for August later in the day. Attention will then turn to the US July Personal Consumption Expenditures (PCE) Price Index, due during the North American session.
The pair remains under pressure as the US Dollar (USD) finds support from stronger economic growth. The US economy expanded at an annualized pace of 3.3% in the second quarter, faster than both the initial 3.1% estimate and the prior 3.0% reading.
Still, the greenback’s upside may be limited by dovish expectations surrounding the Federal Reserve (Fed). On Thursday, Fed Governor Christopher Waller signaled his backing for a rate cut in September, adding that further reductions over the next three to six months may be needed to safeguard the labor market.
Concerns over the Fed’s independence have also resurfaced following remarks from US Vice President JD Vance. In an interview with USA Today, Vance stated that the era of the Federal Reserve’s autonomy is over, noting that monetary policy decisions should involve elected officials rather than being left solely to unelected bureaucrats.
Meanwhile, the European Central Bank’s (ECB) July meeting minutes showed policymakers expect downside risks to dominate over the next two years, citing weaker growth and the drag from US tariffs. However, some officials warned that longer-term risks could shift to the upside amid ongoing uncertainty in energy markets and currency movements.
