Ella 
In early European trading on Thursday, the euro fell to around 1.0935 against the dollar, ending two consecutive gains. The dollar gained as traders turned cautious ahead of a later European Central Bank (ECB) monetary policy meeting. The United States will release the number of initial jobless claims last week and the Philadelphia Federal Reserve Bank’s manufacturing index.
The ECB is expected to keep interest rates on hold at its July meeting, awaiting further evidence of inflation progress, before adding another cut to its first rate cut in June. Bill Diviney, senior euro zone economist at ABN AMRO, said: “Governor Lagarde’s speech should open the door to a rate cut in September, although the signal is softer than before the June rate cut.
Across the pond, traders have boosted bets on more aggressive rate cuts from the Federal Reserve amid signs that inflation is cooling toward the U.S. central bank’s target. On Wednesday, Federal Reserve Governor Christopher Waller said the central bank is “getting closer” to cutting interest rates as the trajectory of inflation improves and the labor market becomes more balanced. Meanwhile, Richmond Fed President Thomas noted that he is “very encouraged” that inflationary easing is beginning to expand and he hopes to see this easing continue. Dovish comments from Fed officials could put some selling pressure on the U.S. dollar (USD) and limit the pair’s downside.
