EUR/USD Strengthens Slightly, Amid ECB Expectations And Geopolitical Sentiment
The EUR/USD currency pair recorded slight gains at the start of this week, trading around 1.1650 during the Asian session on Monday (August 11th). This increase occurred after the pair weakened in the previous session. Support for the euro came from growing expectations that the European Central Bank (ECB) would end its monetary easing cycle in September.
Market optimism regarding the potential de-escalation of the Ukraine-Russia conflict also strengthened the euro's position. News of a possible meeting between former US President Donald Trump and Russian President Vladimir Putin in the near future fueled hopes of a peace agreement. This development boosted global risk sentiment, which also supported the common European currency.
Conversely, the weakening US dollar also helped strengthen EUR/USD. Weaker-than-expected US economic data led the market to consider the likelihood of further interest rate cuts by the Federal Reserve. Currently, the market is pricing in an 89% probability of a Fed rate cut at its September meeting, with a total of approximately 58 basis points by the end of 2025.
Dovish comments from Fed officials have further reinforced these expectations. Federal Reserve Governor Michelle Bowman stated on Saturday that three rate cuts would likely be appropriate this year. She also emphasized that labor market weakness is now a primary concern over the potential for high inflation, signaling a shift in focus in US monetary policy.
Looking ahead, market participants will be closely monitoring several key economic data releases. US consumer inflation data due on Tuesday will be the main focus, followed by preliminary UK second-quarter GDP data and the US Producer Price Index (PPI) on Thursday. The results of these data are expected to provide new direction for EUR/USD movements in the coming sessions. (alg)
Source: Newsmaker.id
