Traders await US inflation data and Fed signals as ECB policymakers prepare for a potential September rate increase.
The EUR/USD pair remains above the 1.1650 level in early European trading, supported by expectations of divergent monetary policies between the Fed and ECB. Spot prices hover near a three-month high, with traders awaiting the US PCE Price Index release for clues on the Fed’s rate path.
Markets have priced in a pause at the Fed’s September meeting amid cooling US inflation and a weakening labor market. Meanwhile, Reuters reports that ECB policymakers are prepared to raise rates in September to counter inflation risks tied to geopolitical tensions. Falling US bond yields and easing oil prices further support the pair.
Focus now shifts to today’s PCE data and Fed Chair Jerome Powell’s Friday speech at Jackson Hole for further direction.