- Market sentiment improves, benefitting the EUR/USD ahead of the upcoming US-Russia conference.
- Trump and Putin are set to meet to discuss the situation in Ukraine.
- Traders are on alert for US inflation data that could influence the Federal Reserve’s interest rate decisions.
On Tuesday, during Asian trading, the EUR/USD hovered around 1.1620 after experiencing declines for two consecutive sessions. The euro could gain further support from a boost in market sentiment, especially with the US-Russia conference approaching.
President Trump and President Putin plan to meet in Alaska on August 15 to explore solutions to the Ukraine conflict. Notably, it seems Ukrainian President Volodymyr Zelensky will not be in attendance.
In July, the European Central Bank (ECB) concluded its latest easing cycle, having made eight interest rate cuts over the past year, bringing borrowing costs to their lowest point since November 2022. This move was aimed at addressing the slowing growth in the eurozone. Yet, some participants in the market still speculate about the potential for another cut from the ECB before the year wraps up.
Attention will be on the US consumer inflation data set to release later in the North American session, as this could impact the Federal Reserve’s rate outlook. The consumer price index (CPI) for July increased by 0.2%, slightly lower than June’s 0.3%, but the annual rate is anticipated to rise to 2.8% for the third month in a row. Core CPI is also expected to see a rise to around 0.3%.
As per the CME FedWatch tool, there’s currently an estimated 84% probability that the Federal Reserve will implement a rate cut during its September meeting.
