EUR/USD Rises Above 1.1700 as Weak US Data and ECB Guidance Drive Gains

EUR/USD Gains Momentum Above 1.1700 on USD Weakness, German CPI in Focus

EUR/USD Pushes Higher Amid Soft US Economic Data

The EUR/USD pair climbed to around 1.1720 during Monday’s early Asian session, supported by continued US Dollar (USD) weakness. The gains follow weaker-than-expected US consumer spending data for May, which adds pressure on the Fed to ease monetary policy.

US Personal Spending and Income Disappoint

According to data released on Friday, US Personal Spending fell for the second time this year, while Personal Income declined by 0.4% in May, the sharpest drop since September 2021. These figures heightened expectations for a Fed rate cut in September, reducing demand for the Greenback.

German Retail Sales and CPI to Set the Tone

Focus now shifts to Germany’s upcoming Retail Sales and CPI inflation reports, scheduled for release later on Monday. These figures are crucial for gauging the Eurozone inflation trajectory and could influence the European Central Bank’s (ECB) policy stance in the coming months.

ECB's Klaas Knot Sees Limited Rate Cuts Ahead

ECB Governing Council member Klaas Knot said on Friday that current interest rates are “a good place to be,” though one more 25 bps rate cut could occur by late 2025. This aligns with market expectations that foresee the ECB’s policy rate bottoming out at around 1.75% over the next 12 months.

"With both central banks signaling diverging paths, EUR/USD may remain supported in the near term," analysts note.

Internal Linking Suggestions:

• How Central Banks Influence Currency Pairs
• German CPI and Its Impact on the Euro
• USD Outlook Ahead of Fed September Meeting