Ella 
EUR/USD appears to have ended a two-day losing streak after recovering a few points from one-week lows around 1.1030-1.1025 hit during Tuesday’s Asian session. However, with US Dollar (USD) buying following suit, any meaningful upside for the pair still looks elusive.
Investors have scaled back their bets on a 50 basis point (bps) interest rate cut by the Federal Reserve in September following a mixed U.S. jobs report on Friday. This helped the greenback attract some buyers for the third day in a row and move back closer to the monthly peak hit last week, which in turn was seen as a headwind for EUR/USD.
Another reason for the euro’s relative underperformance against the dollar is growing expectations that the European Central Bank (ECB) will cut interest rates again in September amid falling inflation in the euro zone. This may further dampen EUR/USD’s moves, although the downside may still be contained in the face of this week’s key data/central bank event risks.
The latest U.S. consumer inflation data will be released on Wednesday, followed by the U.S. Producer Price Index (PPI) on Thursday. This will play a key role in influencing market expectations for the scale of interest rate cuts by the Federal Reserve later this month, thereby driving demand for the dollar. In addition, the important policy decision of the European Central Bank on Thursday will also provide new directional impetus for the EUR/USD currency pair.
Since neither the Eurozone nor the United States will release any relevant economic data that will have an impact on the market on Tuesday, bulls will need to remain cautious against the backdrop of the above fundamentals. Therefore, it would be prudent to wait for strong follow-through buying before confirming that the recent corrective pullback from the 1.1200 round-figure mark or the over-one-year high hit in August is over.
