- EUR/USD may regain its ground as traders widely expect the Fed to deliver a 25 basis point rate cut in September.
- Trump has nominated Stephen Miran to replace Adriana Kugler on the Federal Reserve Board of Governors.
- The Euro may receive support as the ECB is expected to pause easing cycle at September meeting.
EUR/USD remains steady after registering gains in the previous three successive sessions, trading around 1.1660 during the Asian hours on Friday. The pair may regain its ground as the US Dollar (USD) could struggle as markets are pricing in nearly a 93% possibility of a 25 basis point (bps) cut at the September meeting, up from 48% a week ago, according to the CME FedWatch tool.
The expectations for Fed rate cut in September is boosted as new applications for unemployment insurance in the United States (US) increased, following the July US Nonfarm Payrolls (NFP) report pointed to a cooling labor market.
US Initial Jobless Claims showed that the number of US citizens submitting new applications for unemployment insurance increased to 226K for the week ending August 2. This figure came in above the market consensus of 221K and was higher than the previous week’s 218K.
US President Donald Trump has nominated Stephen Miran, chair of the Council of Economic Advisors, to succeed Adriana Kugler on the Federal Reserve Board of Governors. Traders will also keep their eyes on Trump’s plans to replace Fed Chair Powell. Fed Governor Christopher Waller is emerging as a top candidate to serve as the central bank’s chair among Trump’s advisers, per Bloomberg.
The Euro (EUR) may continue to gain ground as traders expect the European Central Bank (ECB) to pause easing cycle at September meeting, with approximately 87% odds for the central bank to keep rates unchanged. Markets are assigning only around a 60% probability of another ECB rate cut before March 2026.
