The EUR/USD pair trades on a stronger note around 1.1125 during the Asian trading hours on Wednesday.
EUR/USD gains traction near 1.1125 in Wednesday’s Asian session. The Fed is widely expected to reduce the benchmark overnight interest rate on Wednesday. Investors await the Eurozone HICP data, which is expected to show an increase of 2.2% YoY in August. The rising expectation of the US Federal Reserve deeper rate cut provides some support to the major pair. The Eurozone Harmonized Index of Consumer Prices data and the Fed monetary policy meeting will be the highlights on Wednesday.
What is the ECB and how does it impact the Euro? The European Central Bank in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa.
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