• Euro advances for the fourth session in a row vs. the US Dollar.
• Stocks in Europe opens mostly with gains on Tuesday.
• EUR/USD pushes harder and reaches the 1.1025/30 band.
• Germany’s Final inflation figures matched the preliminary readings.

The Euro (EUR) is performing well, maintaining its rebound and extending optimism on turnaround Tuesday. This time, it has encouraged the EUR/USD to surpass the psychological barrier at 1.1000 and reach fresh 2-month highs. Meanwhile, the US Dollar (USD) is experiencing an intense sell-off and the USD Index (DXY) has fallen to multi-week lows in the 101.70 region.

The FX universe currently favors risk appetite against the backdrop of the renewed loss of momentum in US and German yields. Despite this, recent strong results from key US fundamentals indicate a resilient US economy and a tight labor market, reinforcing the likelihood of a 25 basis point rate hike by the Federal Reserve at its July 26 gathering. Similarly, a 25 bps rate raise is anticipated at the European Central Bank's (ECB) meeting later in the month.

Francois Villeroy, a Board member of the ECB, suggests that food inflation should lose traction in the second half of the year and hints that the CPI should average 2.5% in 2024. He also argues that the tightening cycle is approaching its peak, where the bank should remain for a while.

In the meantime, there are increasing concerns about an economic slowdown on both sides of the Atlantic, and discussions continue about the potential future actions of the Fed and ECB in normalizing their monetary policies.

In Germany, the final Inflation Rate for June showed the CPI rising 0.3% MoM and 6.4% over the last twelve months, matching the advanced prints. Later in the European morning, the ZEW Institute will publish its Economic Sentiment survey for both Germany and the broader euro area for the current month.

In the US, the NFIB Business Optimism Index and the IBD/TIPP Economic Optimism index are due, followed by a speech from St. Louis Fed James Bullard (2025 voter, hawk).