EURUSD today
Updated
The EUR/USD is holding modest gains around 1.1050 during Tuesday’s European session. Reduced expectations for a 50 bps rate cut by the Fed are giving a boost to the US dollar amid cautious market sentiment, while the Euro struggles due to dovish expectations from the ECB.
Recent reports indicate growing division among ECB policymakers regarding the economic outlook. Some officials are concerned about a potential recession, while others remain focused on persistent inflation pressures, which could impact future rate cut discussions.
However, softer-than-expected preliminary August CPI data from Germany and the Eurozone could challenge the cautious stance of some officials, potentially paving the way for the ECB to implement further rate cuts at its September 12 meeting.
Looking ahead, if the Fed opts for additional or larger rate cuts, the policy gap between the Fed and the ECB could narrow in the medium to long term, favoring EUR/USD. This scenario becomes even more likely as markets anticipate at least two more ECB rate cuts by the end of the year.
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