EUR/USD trades with bearish bias below 1.0950 ahead of ECB rate decision

• EUR/USD weakens near 1.0935 in Thursday’s early European session. 
• The ECB is anticipated to maintain rates steady at its July meeting on Thursday. 
• Fed officials said the central bank is ‘getting closer’ to the first rate cut amid signs of cooling inflation. 

The EUR/USD pair trades on a weaker note around 1.0935, snapping a two-day winning streak during the early European session on Thursday. The Greenback edges higher as traders turn cautious ahead of the European Central Bank's (ECB) monetary policy meeting later in the day. On the US docket, the weekly Initial Jobless Claims and Philly Fed Manufacturing Index will be released. 

The ECB is expected to leave interest rates unchanged at its July meeting, awaiting further evidence of progress on inflation before adding to June’s initial cut. Market players see another rate cut in September, with futures markets showing nearly 80% odds of a rate cut. “President Lagarde’s remarks should leave the door open to a rate cut in September, albeit with softer signaling than that which preceded the June cut.” Said Bill Diviney, senior economist Eurozone at ABN Amro. 

Across the pond, traders raise their bets for more aggressive rate cuts from the Fed amid signs that inflation is cooling toward the US central bank’s target. On Wednesday, Fed Governor Christopher Waller said that the central bank is ‘getting closer’ to an interest rate cut as inflation's improved trajectory and the labor market are in better balance. Meanwhile, Richmond Fed President Thomas noted that he is "very encouraged" that easing in inflation has begun to broaden and he would like to see it continue.” The dovish comments from Fed officials are likely to exert some selling pressure on the US Dollar (USD) and cap the pair’s downside.