Markets Reaction to Rate Cuts Expectations

Markets have fully factored in expectations for rate cuts in October after ECB President Christine Lagarde stated on Monday that current trends will be taken into account at the next meeting. Also, rhetoric by the Chairman of the US Federal Reserve put pressure on the EUR/USD pair.

Fed's Potential Rate Cut

During his speech yesterday, Jerome Powell indicated that the Fed could return to a more customary rate cut of 0.25% instead of a significant 0.5%. These statements supported the US dollar. EUR/USD quotes found support around the 1.1120 mark. The further course of events will depend on the market's reaction to news published throughout the week.