No significant events are expected today.

The EUR/USD pair broke a three-day losing streak, trading around 1.1050 during the Asian session on Monday. The rise in the EUR/USD pair may be attributed to the weakening of the US dollar (USD) following dovish sentiment surrounding the Federal Reserve (Fed). However, the US July Personal Consumption Expenditures (PCE) index may have supported the dollar and limited the pair’s growth.

On Friday, the US Bureau of Economic Analysis reported that the core Personal Consumption Expenditures (PCE) price index rose by 2.5% year-over-year in July, matching the previous 2.5% reading but falling short of the 2.6% forecast. Meanwhile, the core PCE index, excluding volatile food and energy prices, rose by 2.6% year-over-year in July, consistent with the previous reading of 2.6% but slightly below the consensus forecast of 2.7%.

According to CME FedWatch Tool data, markets fully expect a 25 basis point (bps) rate cut by the Fed at its September meeting. Raphael Bostic, President of the Atlanta Fed and one of the leading hawks in the FOMC, stated last week that it might be “time to move” towards lowering rates due to further cooling inflation and a higher-than-expected unemployment rate. FXStreet’s FedTracker, which assesses the tone of Fed officials’ speeches on a scale from 0 to 10, ranging from “dovish” to “hawkish” using a specialized AI model, rated Kashkari’s remarks as neutral with a score of 5.6.

European Central Bank (ECB) Governing Council member François Villeroy de Galhau stated on Friday, according to Bloomberg, that there are “compelling reasons” for the central bank to consider a rate cut in September. Villeroy suggested taking action at the upcoming meeting on September 12, noting that a decision for a further rate cut would be fair and prudent.

Recommendations: Trade primarily with Buy orders from the current price level.