- The EUR/USD may see a rebound as the soft approach regarding the Fed’s September policies continues.
- Recent US economic data supports speculation around potential Federal Reserve rate cuts in September.
- President Trump suggested that Ukraine should seek a deal to conclude the conflict with Russia.
After gaining roughly 0.5% in the last session, the EUR/USD showed a slight decline, hovering around 1.1690 during the Asian trading hours on Monday. Still, there’s potential for further recovery, especially as the US dollar may face challenges in September. Traders will be looking forward to the preliminary US S&P Global Purchasing Managers Index (PMI) data set to be released later today.
The recent economic indicators continue to bolster the argument for a Federal Reserve interest rate reduction this September. For instance, Michigan’s consumer sentiment index dropped from 61.7 in July to 58.6 in August, missing the anticipated reading of 62.0. On the other hand, US retail sales saw a 0.5% rise month-over-month in July, aligning with market expectations but down from June’s 0.9% increase.
According to the CME FedWatch tool, there’s currently about a 93% chance of a 25 basis points cut in the Fed rate this September.
The Trump administration has also imposed a 50% tariff on steel and aluminum imports, effective from August 18, which includes 407 new product codes in the US tariff schedule. Trump mentioned he would make further announcements regarding steel tariffs and additional taxes targeting semiconductor imports.
On Saturday, President Trump expressed that Ukraine should look for a contractual agreement to end its conflict with Russia, noting that “Russia is a huge force.” These remarks came after reports from a recent summit in Alaska indicated that Russian President Vladimir Putin is seeking additional Ukrainian territory, according to Reuters.
Traders are also looking ahead to upcoming inflation data from the Eurozone and Germany.
