• EUR/USD holds its key support of 1.1000 as the Fed looks set to cut interest rates in September.
• Moderate growth in the US CPI in July boosted confidence that inflation remains on a path that leads to bank’s target of 2%.
• The ECB is expected to avoid cutting interest rates aggressively.

The EUR/USD pair trades in a tight range above the psychological support of 1.1000 in Thursday’s European session. The major currency pair faces slight profit-booking after posting a fresh more than seven-month high at 1.1050.

However, the near-term outlook of the major remains firm as the Federal Reserve (Fed) is widely anticipated to rollback its restrictive monetary policy stance in September, which it has been maintaining since March 2022.

The United States (US) Consumer Price Index (CPI) data for July, released on Wednesday, boosted the confidence of investors that the Fed will cut interest rates in September as it showed that price pressures are on track to return to the desired rate of 2%. Annual core CPI, which excludes volatile food and energy prices and is one of most tracked inflation measure by Fed policymakers, rose expectedly by 3.2% against the prior release of 3.3%. In the same period, the headline CPI decelerated to 2.9%, from the estimates and the prior release of 3%.