Ella 
During early European trading on Tuesday, the EUR/USD rose to around 1.0860, as investors will focus on the Federal Reserve’s interest rate meeting, with no key U.S. data to be released. On Wednesday, speeches from European Central Bank (ECB) President Christine Lagarde and the minutes of the latest FOMC meeting will be in focus.
After releasing the U.S. inflation report last week, Federal Reserve (Fed) officials expressed confidence that the inflation rate is moving towards the 2% target. Federal Reserve Vice Chairman Philip Jefferson said on Monday that it is too early to tell whether the recent slowdown in deflation will be sustained in the long term, stressing that he will carefully evaluate incoming economic data and prospects. Meanwhile, Atlanta Fed Vice Chairman Michael Barr said disappointing first-quarter inflation data did not increase the Fed’s confidence in supporting loose monetary policy. ”
The U.S. central bank is expected to keep interest rates steady at its June meeting. Traders see a 76% chance of the Fed cutting interest rates by 25 basis points in September and two more by the end of the year, according to the CME FedWatch Tool.
Across the pond, the European Central Bank (ECB) is expected to cut borrowing costs at its June meeting. European Central Bank board member Isabel Schnabel said the central bank may cut interest rates in June, but warned that given the uncertainty about the outlook, Analysts believe that the divergence in monetary policy between the European Central Bank and the Federal Reserve could weigh on the euro (EUR) and create headwinds for EUR/USD.
