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The EUR/USD pair rebounds to nearly 1.0835 during the Asian session on Thursday. The weaker US Dollar (USD) broadly after the Federal Reserve (Fed) interest rate decision provides some support to the major pair. The US ISM Manufacturing PMI data for July will be the highlight on Thursday.
The Fed held its benchmark interest rates steady in a range of 5.25%-5.50% on Wednesday, a 23-year high, as widely expected. The Fed funds rate has been at this level since July 2023 as part of the Fed’s work to tame inflation back to the Fed’s target.
With “some further” progress on inflation, Fed Chair Jerome Powell said that a September cut “could be on the table.” This, in turn, has exerted some selling pressure on the USD and created a tailwind for EUR/USD.
Across the pond, inflation in the eurozone rose again in July, raising doubt on potential European Central Bank (ECB) interest rate cuts in September. Data released on Wednesday by Eurostat showed that the preliminary estimates of the Harmonised Index of Consumer Prices (HICP) in the Eurozone rose by 2.6% YoY in July, compared to 2.5% in the previous month. This figure exceeded the estimation of 2.4%. In response to the data, the Euro attracts some buyers as traders reconsider the probability that the ECB will cut interest rates at its meeting on September 14.More By This Author:USD/CAD Remains Weak Near 1.3800 After Fed Holds Rate Steady EUR/JPY Drifts Higher Above 165.50 After BoJ Surprises Rate Hike USD/CHF Weakens Below 0.8850, Fed Rate Decision Looms
