Ella 
EUR/USD was trading close to its highest level so far this year near 1.1040 during early European trade on Monday. Amid rising speculation that the Federal Reserve (Fed) will cut interest rates in September, the U.S. dollar (USD) weakened across the board, boosting the euro against the dollar. Traders will be closely watching comments from Federal Reserve Chairman Jerome Powell on Friday for more clues on potential rate cuts.
San Francisco Fed President Mary Daly said on Sunday that recent U.S. economic data gave her “more confidence” that inflation was under control, adding that now was the time to consider adjusting borrowing costs to 5.25% from the current level. 5.5% range. Meanwhile, Chicago Fed President Goolsby emphasized on Sunday that Fed officials should be wary of maintaining restrictive policies longer than necessary. Federal Reserve policymakers issued dovish words, which further put some selling pressure on the US dollar and boosted the euro against the US dollar.
Currently, investors are pricing in about a 70% chance of the Fed cutting interest rates by 25 basis points in September, while a handful of investors expect the Fed to cut interest rates by 50 basis points. Preston Caldwell, chief U.S. economist at Morningstar, pointed out that the inflation report provides further support for the Federal Reserve to aggressively cut interest rates starting in September.”
In the Eurozone, the euro (EUR) remained strong on expectations that the European Central Bank (ECB) would gradually lower interest rates. European Central Bank President Christine Lagarde emphasized at a recent press conference that policymakers “will not pre-commit to a specific interest rate path. The consensus is to stick to economic data as the guide and hold in-person meetings one after another.” The practice of determining interest rate policy.”
