• EUR/USD wrapped up the trading week nearly where it started.
• Market balance has broadly recovered as wait to Fed cuts resumes.
• Coming up next week: EU GDP & US CPI inflation.

EUR/USD finished off a sedate trading week close to where it began, trading within a tight range of slightly more than 1%. Fiber tried to spark a fresh bid back above the 1.1000 handle on Monday, but price spent the rest of the week easing back into familiar technical levels.

Market focus remains squarely on the odds of a September rate cut. Rate markets have fully priced in the start of a rate cutting cycle when the Federal Open Market Committee (FOMC) meets on September 18, but bets of an initial double cut for 50 basis points have eased to slightly-better-than-even from nearly 70% earlier this week. According to the CME’s FedWatch Tool, rate traders are pricing in 53.5% odds of a 50 bps cut in September, with an additional two cuts worth 25 basis points apiece through the remainder of 2024.

Coming up next week, investors will get a fresh batch of inflation data to worry about, with US Producer Price Index (PPI) and Consumer Price Index (CPI) inflation on the cards for Tuesday and Wednesday, respectively. US Retail Sales and another update from the University of Michigan’s Consumer Sentiment Survey Index are also due later next week. Core PPI inflation and headline CPI inflation are both still stuck around 3% YoY, and investors will be hoping for a continued easing in the prints to keep the Fed on the rails toward rate cuts.