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The EUR/USD pair recovers some lost ground around 1.1080, snapping the two-day losing streak on Friday during the early Asian session. However, the upside might be limited as traders might prefer to wait on the sidelines ahead of the German July Retail Sales and US July Personal Consumption Expenditure (PCE) Price Index.
The US Gross Domestic Product (GDP) growth rate rose at an annual rate of 3.0% in the second quarter (Q2), the Department of Commerce reported in its second estimate released on Thursday. The figure was better than the forecast and the initial estimate of 2.8%. The report suggested that the US could avoid recession and dampen the hope for a larger 50 basis-point (bp) rate cut in September by the Federal Reserve (Fed). This, in turn, provides some support to the US Dollar (USD). Financial markets are now pricing in nearly 66% of a 25 basis points (bps) rate cut in September, but the chance of a deeper rate cut stands at 34%, down from 36.5% before the US GDP data, according to the CME FedWatch Tool.
Across the pond, the Consumer Price Index (CPI) data from Germany and Spain showed that inflation looks to have cooled further in August, prompting the expectation of an interest rate cut by the European Central Bank (ECB) and undermining the Euro (EUR). ING’s global head of macroeconomics, Carsten Brzeski, said that the outcome was “great news for the ECB” and further stated that a slowing economy and cooling inflation make a “perfect macro backdrop” for lower rates. Nonetheless, emphasized that service inflation isn’t dead yet.More By This Author:Gold Price Drifts Higher Ahead Of US GDP Data USD/CAD Remains On The Defensive Below 1.3500 Despite USD Recovery Gold Price Extends Rally Near The All-Time High Amid Geopolitical Risks, Fed Rate Cut Bets
