• EUR/USD rises to 1.0740 even though Germany’s outlook appears to be dull.
• The ECB could deliver subsequent rate cuts to uplift poor demand prospects.
• The US Dollar will dance to the tunes of the US core PCE inflation data for May.

EUR/USD extends its recovery to 1.0740 in Tuesday’s European session. The major currency pair raises as growing optimism for the Federal Reserve (Fed) to reduce interest rates twice this year has increased investors’ risk appetite. 

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, has dropped to 105.40 as demand for safe-haven assets has eased. The DXY Index corrects even though the preliminary United States (US) S&P Global Purchasing Managers Index (PMI) unexpectedly beats the consensus and its prior numbers in June.

This week, investors will focus on the US core Personal Consumption Expenditure price index (PCE) for May, which will be published on Friday. The core PCE price index data is the Fed’s preferred inflation measure, and it will provide fresh cues on when and how much the central bank will reduce interest rates this year.