Markets await US July PCE data, with core inflation seen rising 3.3% YoY, fueling Fed rate hike bets.
The EUR/USD pair fell to 1.1665 in early European trading, weighed by a stronger US Dollar ahead of key US inflation data. The July Personal Consumption Expenditures Price Index, due later Wednesday, is expected to show core inflation rising 3.3% year-over-year, reinforcing sticky price pressures amid Middle East energy risks.
Markets have scaled back expectations for a September Fed rate hike, with odds now at 38.4% for a 25 basis points increase, down from 67% earlier in the month. Analysts note the pair broke out of its recent range, though overbought signals may limit further gains.
Focus shifts to Fed Chair Jerome Powell’s speech at the Jackson Hole symposium on Friday, which could provide fresh clues on US monetary policy.