EUR/USD climbs higher, propelled by market risk appetite.
The major currency pair displayed strength on Tuesday, with the current EUR/USD exchange rate standing at 1.0800.
All eyes are on the upcoming Central Bank meetings, as their decisions can significantly influence currency volatility. The US Federal Reserve commences its two-day meeting today and is expected to announce the interest rate level on Wednesday. The current rate stands at 5.25% per annum, and it is widely anticipated that there will be no change as it is already factored into the euro/dollar quotes. However, the Fed's comments will hold substantial weight.
On Thursday, the European Central Bank (ECB) will convene its meeting. The prevailing scenario suggests a 25 basis point interest rate hike to 4.00% per annum. The ECB finds itself in the position of needing to adopt more proactive measures to combat inflation; otherwise, its previous efforts will be in vain.
Ahead of the Fed's decision, the US consumer price index data for May will be released. There are expectations of a decrease in inflation to 0.2% month-on-month (m/m). Such an outcome would provide further support for a pause in the series of monetary policy tightening.