EUR/USD extends its downside near the 1.1040 mark, Fed, ECB meeting eyed

• EUR/USD extends its downside near 1.1040 region on Wednesday.
• The Euro remains under pressure as the EU economy has slowed and the fear of recession has arisen.
• Investors are simultaneously preparing for the interest rate decision from the Federal Reserve (Fed) and the European Central Bank (ECB).

The EUR/USD pair extends its downside and edges lower to the 1.1040 mark in the early Asian session. The major pair trades on a negative note for six consecutive days on Wednesday as concerns about an economic slowdown in the Eurozone emerged.

The Euro remains under pressure following the downbeat economic data released. On Tuesday, the IFO Institute's monthly survey reported that July's German Business Climate Index decreased from 88.6 to 87.3. This result fell short of the market's estimate of 88.0. Klaus Wohlrabe, head of IFO surveys, told Reuters that the German Gross Domestic Product (GDP) was likely to contract in the third quarter, which exerts pressure on the Euro.

Earlier this week, the Eurozone manufacturing sector's woes worsened in July, with the Manufacturing PMI decreasing to 42.7, below market expectations of 43.5 and June's reading of 43.4. The index reached its lowest level in 38 months.

The ECB is anticipated to raise rates by 25 basis points (bps) on Thursday. Still, the possibility of a rate hike in September has decreased as the EU economy has slowed and the fear of recession has arisen.

Across the pond, the Conference Board's Consumer Confidence Index rose to 117 in July from 110.1 (revised from 109) in June. On the same line, the House Price Index for May YoY came in at 2.8%, above expectations of 2.6% but below the prior month's data. The Richmond Fed Manufacturing Index declined from -8 in June to -9 in July.

The Federal Reserve (Fed) will announce its monetary policy decision on Wednesday. The Fed is widely anticipated to raise interest rates by 25 basis points (bps) to 5.25–5.50%. Market participants will watch Fed Chairman Jerome Powell's press conference for hints about the forward path of monetary policy. This key event could trigger volatility across financial markets.

Looking ahead, market participants are simultaneously preparing for the release of the US Federal Reserve (Fed) and the European Central Bank (ECB) monetary policy decisions on Wednesday and Thursday, respectively. Also, the FOMC Press Conference and the ECB Press Conference will be closely watched. Apart from this, the US Advanced Gross Domestic Product (GDP) QoQ and the core Personal Consumption Expenditure (PCE) Price Index MoM will be due later this week.