EUR/USD extends its decline near 1.0900 on the recovery of US Dollar

• EUR/USD trades in negative territory for the second consecutive day around 1.0915 in Wednesday’s Asian session. 
• Traders expect a deeper Fed rate cut in September this year. 
• The disappointing Eurozone June Retail Sales report exerts some selling pressure on the Euro. 

The EUR/USD pair trades on a softer note near 1.0915 after retracing from seven-month highs of nearly 1.1008 during the Asian trading hours on Wednesday. The firmer US Dollar (USD) broadly drags the major pair lower. Investors await the release of June Trade Balance and Industrial Production from Germany, which are due later in the day. 
 
The recovered risk sentiment and high US Treasury bond yields provide some support to the Greenback. Nonetheless, investors expect a more aggressive rate cut from the Federal Reserve (Fed) starting in September. This, in turn, might cap the USD’s upside and create a tailwind for EUR/USD. Meanwhile, the markets have priced in a 69.5% possibility of a 50 basis points (bps) Fed rate cut in September, up from 13.2% last week, according to the CME FedWatch tool.

On the US docket, the trade deficit narrowed to $73.1 billion in June as the value of exports of goods and services increased by the most since earlier this year, according to the US Census Bureau on Tuesday.

On the other hand, more sluggish evidence about the eurozone economy exerts some selling pressure on the Euro (EUR). Data released by Eurostat revealed on Tuesday that Eurozone Retail sales unexpectedly fell by 0.3% in June versus a rise of 0.5% prior. The market consensus was a 0.1% increase.