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The EUR/USD pair consolidates its losses around 1.0815 during the early Asian session on Wednesday. The major pair edges lower amid risk-aversion and weaker-than-expected preliminary Gross Domestic Product (GDP) for Q2 from Germany. Traders prefer to wait on the sidelines ahead of the Federal Reserve (Fed) Interest Rate Decision on Wednesday. 

The German economy fell back into contraction in the second quarter, contracting by 0.1% QoQ after expanding 0.2% in Q1, the first estimate data published by Destatis showed on Tuesday. This figure came in weaker than the expected 0.1% increase. Meanwhile, the annual Gross Domestic Product (GDP) rate dropped by 0.1% in Q2, compared with a 0.2% contraction in Q1 and the 0% forecast. The Euro (EUR) exerted some selling pressure on the downbeat German GDP data. 

However, the Eurozone economy expanded by 0.3% in the three months to the end of June, above the market consensus of a 0.2% increase on a quarterly basis. The preliminary inflation data in the broader euro area and Germany’s Retail Sales will be released later on Wednesday. These readings could offer some hints about September’s rate cut by the European Central Bank (ECB). 

Across the pond, the Fed is expected to hold interest rates steady at a two-day policy meeting on Wednesday. Nonetheless, the markets widely anticipate the US central bank to start easing its policy at its following meeting in September as inflation easing faster than estimated in June. “At the moment, a modest cut of 25 basis points in September seems likely. If that goes well, we could even see two additional 25 basis point cuts before 2024 comes to an end,” said Jacob Channel, chief economist at LendingTree.More By This Author:USD/CHF Extends Upside Above 0.8850, Eyes On Fed Rate Decision WTI Extends Its Decline Below $76.50 Amid China Demand Concerns, Eyes On Fed Rate Decision USD/JPY Remains On The Defensive Below 154.00, Fed/BoJ Rate Decision In The Spotlight