- EUR/USD remains steady as it awaits the release of total eurozone production figures for the second quarter.
- CME’s FedWatch tool indicates a nearly 94% probability of a 25 basis point rate cut in September.
- U.S. Treasury Secretary Scott Bescent believes that the Fed could implement a 50 basis point rate reduction in September.
The EUR/USD pair has seen minimal movement following two days of declines, with the U.S. dollar making a bit of a recovery and hovering around 1.1700 during Thursday’s Asian trading session. Traders are keeping their eyes peeled for the second quarter GDP data that’s set to be released. There’s also plenty of attention on the upcoming U.S. Producer Price Index (PPI) release and weekly unemployment claims data as we move through the latter part of the North American session.
Still, the dollar might struggle to gain much ground as there are increasing expectations for additional interest rate cuts from the U.S. Federal Reserve. According to the CME’s FedWatch tool, futures traders are pricing in about a 94% chance of a 25 basis point cut during the Fed’s September meeting.
In an interview on Wednesday, Treasury Secretary Scott Bescent stated that short-term interest rates set by the Fed should ideally be 1.5-1.75% lower than the current benchmark. He also mentioned that a 50 basis point cut in September seems likely.
Interestingly, U.S. President Donald Trump shared a “paper calculation” suggesting that the Fed’s interest rate should be close to 1%. He further argued that interest rates should be reduced by 3 or 4 points, calling them mere calculations on paper.
Looking ahead, the EUR/USD pair is anticipated to wrap up its easing cycle in July, following eight cuts over the last year, which would result in the lowest borrowing costs seen since November 2022.
