EUR/USD added to Tuesday’s losses below 1.0700. The US Dollar rose to multi-week highs, helped by yields. Germany’s Consumer Confidence receded in July. The intense buying interest in the US Dollar led the USD Index to build on Tuesday’s gains and advance to multi-week highs past the 106.00 barrier on Wednesday, exerting notable pressure on risk-sensitive assets and sending EUR/USD to fresh monthly lows near 1.0660.
Additionally, Board member Fabio Panetta suggested the ECB could gradually reduce interest rates as inflation falls, while ECB Chief Economist Philip Lane projected continued interest rate cuts if price pressures ease but may slow down in case of unexpected surprises. The CME Group's FedWatch Tool now indicates nearly a 63% probability of lower interest rates in September and around 93% in December.