- EUR/USD appreciates ahead of Eurozone Industrial Production and the German ZEW Economic Sentiment survey.
- The Euro gains on hawkish comments from the ECB officials.
- Traders expect the Fed to lower rates by 25 basis points in September.
EUR/USD extends its winning streak for the fourth consecutive session, trading around 1.1780 during the Asian hours on Tuesday. The pair appreciates as the Euro (EUR) gains ground ahead of seasonally adjusted Eurozone Industrial Production figures for July and German ZEW Survey Economic Sentiment data for September.
The Euro draws support against its peers from hawkish European Central Bank (ECB) commentary. European Central Bank (ECB) board member Isabel Schnabel said on Tuesday that interest rates in the Eurozone are in a good place and added that upside risks to inflation continue to dominate. Schnabel said the growth is likely to exceed the potential, with domestic demand counteracting falling exports.
ECB policymaker Peter Kazimir said Monday that policy should not be adjusted over “small deviations” from the inflation target, while warning of upside risks to inflation. Kazimir added that interest rates have been brought into neutral territory.
The EUR/USD pair advanced as the US Dollar (USD) weakened on rising expectations that the Federal Reserve (Fed) will cut rates by 25 basis points at its September meeting on Wednesday. Markets are also assigning a slim probability to a larger 50-basis-point cut, while pricing in continued easing through 2026 to counter the risk of recession.
Traders will likely observe the Fed’s Summary of Economic Projections (SEP), the ‘dot plot,’ where each member of the Federal Open Market Committee (FOMC) expects the federal funds rate in the near future.
