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EUR/USD edges higher after softer US PCE trims Fed hike bets

The euro pair was last around 1.1363, up 0.2% on the day, after hitting 1.1312 Tuesday, its lowest level since May 2025.

Reported · Written up by our desk · Major Pairs

EUR/USD held modest gains on Wednesday as traders digested softer US inflation data that reduced expectations for another Federal Reserve rate hike, FXStreet reported. At the time of writing, the pair traded around 1.1363, up 0.20% on the day, after touching 1.1312 on Tuesday, its lowest level since May 2025.

FXStreet said the US Dollar weakened despite the euro rebound, with the US Dollar Index, which tracks the greenback against six major currencies, trading around 101.20 after reaching a two-month high of 101.61 on Tuesday.

The inflation reading came from the core Personal Consumption Expenditures Price Index rising 0.2% month over month in August, below the 0.3% forecast, while headline PCE increased 0.3% versus a 0.4% expectation. On an annual basis, core and headline inflation held at 3.0% and 3.4%, respectively, below market consensus, according to FXStreet.

FXStreet also noted that markets saw about a 37% chance of a Fed rate increase next month, down from roughly 70% earlier in the week, based on the CME FedWatch Tool. Despite the recovery, EUR/USD was still on track to end September in negative territory, the outlet added.

Latest closeEUR/USD 1.137 ▼0.1%|Dollar index 101.25 ▲0.3%

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