EUR/USD GRIPS GAINS SLIGHTLY BELOW 1.1100 AHEAD OF JACKSON HOLE MEETING

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  • EUR/USD holds onto gains below 1.1100 due to weakness in the US Dollar.
  • The US Dollar faces a sell-off amid firm Fed September rate-cut bets.
  • ECB Rehn sees market expectations for rate cuts in September as appropriate.

EUR/USD trades close to a more than seven-month high slightly below the round-level resistance of 1.1100 in Tuesday’s European session. The major currency pair holds gains as the US Dollar (USD) continues to face a sheer sell-off, weighed by firm expectations that the Federal Reserve (Fed) will begin cutting interest rates in September.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, hovers near a seven-month low at around 101.80. 

Market speculation for Fed interest rate cuts has strengthened as officials seem to be more worried about the United States (US) labor market and remain confident that price pressures are on track to the 2% target. 

On Monday, Minneapolis Fed Bank President Neel Kashkari cited concerns over signs of weakening labor market conditions and favored rate cuts in September. “The balance of risks has shifted, so the debate about potentially cutting rates in September is an appropriate one to have,” he said in an interview with The Wall Street Journal.

“If we saw some quicker deterioration in the labor market, then that would tell me, ‘well, we need to do more, quickly, to support the labor market, even if we have uncertainty about where our ultimate destination is going to be,” he added. However, Kashari pushed back expectations of the Fed’s jumbo rate cuts citing that layoffs remain low and higher jobless claims are not a sign of labor market deterioration.



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