The EUR/USD pair is trading close to 1.1750 during Thursday’s Asian session, recovering from more than 0.5% losses seen in the previous day. Traders are cautious as they await the release of Germany’s GfK Consumer Confidence Survey later today.
The Euro (EUR) came under pressure on Wednesday after the German IFO Business Climate Index dropped unexpectedly to 87.7 in September, down from 89.0 in August and well below the market forecast of 89.3. The disappointing data weighed on sentiment around the common currency.
Despite this, the pair is finding support as the US Dollar (USD) retreats ahead of key Federal Reserve speeches and Friday’s release of the Personal Consumption Expenditures (PCE) Price Index, the Fed’s preferred inflation gauge.
The greenback initially gained after Fed Chair Jerome Powell reiterated concerns over stubborn inflation and a cooling labor market, calling the situation “challenging.” Even so, futures markets tracked by the CME Fed Watch tool now show a 92% probability of an October rate cut, compared with 87% a week ago.
Adding to the policy debate, San Francisco Fed President Mary Daly said more rate reductions may be needed to ensure price stability and support employment. In contrast, Chicago Fed President Austan Goolsbee pushed back against expectations of consecutive rate cuts, highlighting divisions among Fed officials. Meanwhile, Donald Trump’s recent Fed nominee, Stephen Miran, further complicated the outlook with differing views on the policy path.
