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• EUR/USD weakens near 1.0890 in Tuesday’s Asian session. 
• Fed’s Powell said the central bank will not wait until inflation hits the 2% target to cut interest rates.
• The ECB is expected to hold the key interest rate unchanged at its July meeting on Thursday. 

The EUR/USD pair trades on a weaker note around 1.0890 during the early Asian trading hours on Tuesday. The renewed US Dollar (USD) demand weighs on the major pair. Traders will keep an eye on US Retail Sales for June and the speech from the Federal Reserve’s (Fed) Adriana Kugler on Tuesday. On Thursday, the European Central Bank (ECB) interest rate decision will take center stage. 

Traders increased their bets that the US Federal Reserve (Fed) would cut the interest rate in September. On Monday, Fed Chair Jerome Powell said that the central bank will not wait until inflation hits the 2% target to cut interest rates. “The implication of that is that if you wait until inflation gets all the way down to 2%, you’ve probably waited too long, because the tightening that you’re doing, or the level of tightness that you have, is still having effects which will probably drive inflation below 2%,” said Powell. 

Meanwhile, Fed Bank of San Francisco President Mary Daly stated that inflation is cooling down in a way that bolsters confidence it’s on its way to 2%. However, Daly added that more information is needed before making a rate decision. The Fed rate cut expectation is likely to drag the Greenback lower and create a tailwind for EUR/USD. 

On the other hand, the ECB is anticipated to hold the main refinancing rate, the interest rate on the marginal lending facility, and the deposit facility unchanged at 4.25%, 4.50%, and 3.75%, respectively, at its July meeting on Thursday. The ECB decided to cut the interest rate for the first time since 2019 in June after nine months of leaving the rate unchanged. Analysts expect that two more rate cuts are on the table this year, in September and December 

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