The euro fell in European trade on Wednesday on track for the first loss in three days against the dollar, as recession concerns diminished following an initial US-China trade agreement in China. 

The odds of an ECB interest rate cut in July dropped, with the eyes now focused on US inflation data later today to gauge the likelihood of Fed rate cuts in the second half of the year.

The Price

The EUR/USD price fell 0.15% today to $1.1405, with a session-high at $1.1439.

The euro rose 0.1% on Tuesday against the dollar, the second profit in a row. 

US Dollar

The dollar index rose 0.1% on Wednesday against a basket of major rivals as US recession fears took a back seat. 

Trade Agreement 

US and Chinese trade representatives said a trade framework has been reached, with both sides seeking approval from Trump and Xi Jinping to carry on discussions. 

This progress comes after an important deal reached in mid May, which stopped the enforcement of most tariffs for 90 days.

The most crucial items of the initial agreement is reducing limits on US chip exports, and China’s rare-earth minerals and magnet exports.

European Rates

ECB President Christine Lagarde hinted at the possible end of the current cycle of policy easing, which was in response to a combined shock such as the Covid 19 pandemic, the Ukrainian war, and the energy crisis.

According to a Reuters source, most ECB members now aim at holding interest rates unchanged in July, with the global markets now expecting just an additional 25 basis points of rate cuts by the end of the year.  

The odds of a 0.25% ECB rate cut in July now stood below 30%, with traders awaiting more eurozone data and remarks by ECB officials to gather more clues. 

The Japanese yen fell in Asian trade on Wednesday against a basket of major rivals, extending losses against the dollar for the second straight session and about to mark a two-week trough.

The decline comes amid slower haven demand on the currency as the US and China reached a trade framework agreement following intensive negotiations in London.

The Bank of Japan is convening next week to discuss monetary policies, with the odds of a 0.25% rate hike still below 50%.

The Price

The USD/JPY price rose 0.2% today to 145.16 yen per dollar, with a session-low at 144.65.

The yen lost 0.2% on Tuesday against the dollar, marking the third loss in four days, and plumbing a two-week trough at 145.29 amid little progress in US-China trade talks. 

Trade Agreement 

US and Chinese trade representatives said a trade framework has been reached, with both sides seeking approval from Trump and Xi Jinping to carry on discussions. 

This progress comes after an important deal reached in mid May, which stopped the enforcement of most tariffs for 90 days.

The most crucial items of the initial agreement is reducing limits on US chip exports, and China’s rare-earth minerals and magnet exports.

Japanese Rates

The Bank of Japan is meeting on June 16-17 to discuss the latest economic developments and suitable policies.

Following recent GDP growth data, the odds of a Bank of Japan 0.25% interest rate hike in June rose from 40% to 45%.

Bank of Japan Deputy Governor Shinichi Uchida said the bank will continue to raise interest rates if the economy recovers from the negative impact of US tariffs, however he still cautioned that the economic outlook remains highly uncertain.

Now traders await more Japanese data on inflation, unemployment, and wages to gather additional clues.

Ethereum rallied on Tuesday amid optimism about the US-China trade talks and due to strong global institutional demand on the cryptocurrency.

The negotiations entered their second day in London as both sides aim to stop the trade war and reach an agreement, after the dispute disrupted supplies of rare-earth minerals and impacted many industries. 

The US Trade Secretary Howard Lutnick said negotiations with China are progressing satisfactorily, expecting talks to continue all day.

Now markets await crucial US consumer prices data on Wednesday, followed by producer prices data on Friday to gather clues on future Fed rate cuts.

Ethereum was boosted after huge purchases by major institutions, led by BlackRock which bought over $500 million worth of ethereum in recent days. 

Abraxas Capital also acquired 350,000 ethereum units worth $837 million, reflecting increasing confidence in the currency.

Ethereum

Ethereum surged 7% on Coinmarketcap as of 21:28 GMT to $2762.

The dollar rose against major rivals on Wednesday as the markets assess the ongoing US-China trade talks, and before important US inflation data.

The negotiations entered their second day in London as both sides aim to stop the trade war and reach an agreement, after the dispute disrupted supplies of rare-earth minerals and impacted many industries. 

The US Trade Secretary Howard Lutnick said negotiations with China are progressing satisfactorily, expecting talks to continue all day.

Now markets await crucial US consumer prices data on Wednesday, followed by producer prices data on Friday to gather clues on future Fed rate cuts.

On trading, the dollar index rose 0.1% as of 21:06 GMT to 99.04, with a session-high at 99.3, and a low at 98.8.

Loonie 

The Canadian dollar rose 0.2% against its US counterpart as of 21:23 GMT to $0.7312.

Aussie

The Australian dollar rose 0.1% against the US dollar to $0.6523 as of 21:23 GMT.