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• EUR/USD rises to near 1.1000 as the US Dollar declines on firm Fed rate-cut prospects.
• The Fed is expected to cut interest rates by 25 bps in September.
• ECB officials refrain from committing a pre-defined rate-cut path.

The EUR/USD pair rebounds to near the psychological resistance of 1.1000 in Friday’s New York session. The major currency pair bounces back as the US Dollar (USD) declines with investors gaining confidence that the Federal Reserve (Fed) will start reducing interest rates from the September meeting.

The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, declines to near 102.70. Firm speculation for Fed interest-rate cuts in September has improved appeal for risk-sensitive currencies. 10-year US Treasury yields tumble to near 3.89%.

While market participants remain confident over Fed rate cuts in September, traders pare bets supporting a 50-basis point (bps) interest-rate reduction as fears of the United States (US) entering a recession have waned after robust growth in Retail Sales in July and lower-than-expected Initial Jobless Claims for the week ending August 9.

The next trigger for the US Dollar will be Fed Chair Jerome Powell’s speech at the upcoming Jackson Hole (JH) symposium, which will be held from August 22-24. Jerome Powell is expected to provide cues for interest rate-cut path for the entire year.

Meanwhile, the appeal of the Euro (EUR) remains firm as investors expect that the European Central Bank (ECB) will reduce interest rates gradually. ECB policymakers have been refraining from committing a specific rate-cut path as they worry that price pressures could reaccelerate.

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