EUR/USD Holds Around 1.1700 After Retreating from 4-Week High
EUR/USD weakened slightly in early Asia, trading around 1.1700 after rising around 1% in the previous session. This correction reflects short-term profit-taking, while the downside appears limited as the market still sees the possibility of a weakening US dollar amid growing expectations of a Fed rate cut in September.
Jerome Powell's comments at Jackson Hole emphasized that risks to the labor market are increasing, although inflation remains a threat, so the decision is not final. He also stated that the Fed should not tighten policy based solely on uncertain estimates of whether employment has exceeded sustainable levels.
Market expectations now price in nearly an 85% chance of a 25 bps cut at the September meeting, up from around 75% before Powell's speech. The prospect of looser policy tends to pressure the US dollar, limiting EUR/USD's decline despite an intraday pullback.
Attention will next turn to the release of US second-quarter (annualized) GDP and the July PCE index—the Fed's favorite inflation measure—on Friday. Weaker-than-expected data has the potential to strengthen the euro, as the dollar continues to fall, while warmer data could reduce the chances of a rate cut and curb EUR/USD gains. (ayu)
Source: Newsmaker.id
