The EUR/USD pair has extended its gains, driven by growing expectations that the Federal Reserve (Fed) will aggressively cut interest rates. The US Dollar Index (DXY) has declined, as the probability of a 50 basis points (bps) rate cut in September has increased significantly.
US Inflation Data
The US Producer Price Index (PPI) data for August came in lower than expected, suggesting a potential slowdown in consumer spending and supporting expectations for a Fed rate cut.
ECB Monetary Policy
The European Central Bank (ECB) cut interest rates by 25 basis points (bps) as expected, but refrained from providing a specific rate cut path. ECB officials have indicated that future rate decisions will be data-dependent.
Economic Data
Investors will focus on US Retail Sales data for August, which is expected to show a slowdown in consumer spending. The Eurozone Industrial Production data for July came in better than expected.
EUR/USD Technical Analysis
The EUR/USD pair has broken above the 20-day Exponential Moving Average (EMA), indicating a bullish trend. The 14-day Relative Strength Index (RSI) is approaching 60.00, suggesting potential bullish momentum.