EUR/USD eases below 1.1150 ahead of Eurozone/US PMI data

• EUR/USD is losing ground around 1.1145 in the Asian session on Wednesday.
• Fed officials noted that the central bank could cut interest rates in September if inflation continues to cool.
• The ECB is expected to resume its easing cycle in September.

EUR/USD is trading with slight losses near 1.1145, snapping a four-day winning streak during the Asian session on Thursday. The major pair’s downside is likely to be limited amid firmer expectations that the US Federal Reserve (Fed) will begin easing monetary policy in September. Later on Thursday, the preliminary purchasing managers’ index (PMI) for August in the Eurozone and the US will be released.

Minutes of the Fed’s July 30-31 meeting released on Wednesday suggested that most Fed officials agreed last month that they were likely to cut interest rates at their next meeting in September as long as inflation continued to cool. Atlanta Fed President Raphael Bostic said, “We may need to change our policy stance sooner than I would have previously thought.”

Fed Chairman Jerome Powell’s Jackson Hole speech may provide some clues about the trajectory of US interest rates. Markets expect Powell to signal on Friday that inflation is heading toward the Fed’s 2 percent target. Any dovish remarks from Fed officials could put some selling pressure on the greenback and create a tailwind for EUR/USD.

Across the pond, European Central Bank (ECB) policymakers refrained from committing to a specific rate cut path, citing expectations that euro zone inflation will remain close to current levels for the rest of the year. However, ECB policymaker Olli Rehn said on Monday that the ECB may need to cut interest rates again in September due to persistent economic weakness. Markets have pegged a nearly 90 percent chance of a 25 basis point (bps) cut in the deposit rate to 3.5 percent in September and will see at least one more move before the end of the year.