EUR/USD snaps two-day winning streak, trades lower around 1.0870

• EUR/USD trades lower ahead of economic data releases from both economies.
• US Dollar (USD) weakened due to disappointing US economic data on Tuesday.
• Investors anticipate less likelihood of an interest rate hike in September’s meeting by the Fed.

EUR/USD snaps a two-day winning streak, trading around 1.0870 during the Asian session on Wednesday. However, the EUR/USD pair strengthened due to the retreating US Dollar (USD), prompted by the downbeat economic data from the United States (US) on Tuesday.

US Consumer Confidence (Aug) declined to 106.1 from the previous reading of 114.0, falling short of the projected 116.0. Furthermore, US JOLTS Job Openings experienced a reduction in July, recording 8.827 million compared to the previous 9.165 million. This contrasted with the expected rise to 9.465 million.

Market participants anticipate that the US Federal Reserve (Fed) will postpone rate hikes until its September meeting. As per the CME's FedWatch Tool, the market is reflecting an 11.5% probability of a rate hike occurring during the September meeting. This sentiment is consequently causing downward pressure on the value of the buck.

Additionally, during the Jackson Hole Symposium, US Federal Reserve (Fed) Chairman Jerome Powell conveyed that the Fed's forthcoming choice regarding the next interest rate hike will hinge on economic data.

As a result, the EUR/USD traders await the upcoming releases of economic data from the US and Eurozone, seeking a clearer understanding of inflation scenarios in both economies. These datasets include US ADP Employment Change (Aug) and preliminary Gross Domestic Product Annualized (Q2) are set to be released later in the North American session. On the Eurozone’s docket, the Consumer Sentiment, German preliminary Consumer Price Index (CPI) and Harmonized Index of Consumer Prices will be eyed.

The US Dollar Index (DXY), which measures the performance of the US Dollar (USD) against the six other major currencies, trades higher around 103.60 at the time of writing. The index is treading waters to retrace from the two-day losses. The downbeat US Treasury yields are exerting downward pressure on the Greenback. The yield on the 10-year US bond declined by 2.04% on Tuesday, currently trading at 4.12%.