The US Dollar (USD) traded in a vacillating fashion in the low-105.00s when tracked by the USD Index (DXY) on Wednesday, providing humble support to risk sentiment and encouraging EUR/USD to extend its upside impulse for the third session in a row near the 1.0750 zone.
EUR/USD maintained its constructive stance so far this week. Trading conditions remained thin and volatility was absent on the US holiday. Political concerns in Europe appear to have dwindled somewhat. The US Dollar traded in a vacillating fashion in the low-105.00s when tracked by the USD Index on Wednesday, providing humble support to risk sentiment and encouraging EUR/USD to extend its upside impulse for the third session in a row near the 1.0750 zone.
In the short term, the ECB's recent rate cut, contrasting with the Fed's decision to maintain rates, has widened the policy gap between the two central banks, potentially exposing EUR/USD to further weakness. On this, it is worth noting that ECB Vice President Luis de Guindos emphasized on Tuesday that rate decisions will align with the release of the bank's updated macroeconomic projections in September.
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