EUR/USD holds below 1.1150 amid cautious mood, all eyes on FOMC Minutes

• EUR/USD edges lower to near 1.1120 in Wednesday’s Asian session. 
• The cautious sentiment lifts the US Dollar, but more dovish remarks from the Fed might cap its upside. 
• Investors will closely watch the FOMC Minutes on Wednesday for fresh catalysts. 

The EUR/USD pair loses momentum around 1.1120, snapping the three-day winning streak during the early European session on Wednesday. The cautious mood in the markets ahead of the July Federal Open Market Committee (FOMC) Minutes meeting minutes on Wednesday provides some support for the Greenback. 

The FOMC kept the Federal Funds rate unchanged between 5.25%-5.50% at its July meeting. During the press conference, Fed Chair Jerome Powell noted that a rate cut could be on the table if inflation continues to ease. The dovish tone of the meeting drags the Greenback lower in the previous sessions. However, the cautious mood ahead of the key event boosts the safe-haven currency like the US Dollar (USD) and creates a headwind for EUR/USD. 

On Friday, traders will shift their attention to Fed Chair Jerome Powell’s speech at the Jackson Hole Symposium about further clues on the Fed’s plans. Financial markets have priced in nearly a 67.5% possibility of the Fed cutting interest rates by 25 basis points (bps) in September, according to the CME FedWatch Tool.

Across the pond, the European Central Bank (ECB) policymaker Olli Rehn said on Monday that the ECB may need to lower interest rates again in September due to persistent economic weakness. Rehn emphasized that the recent increase in negative growth risks in the euro area has supported the case for ECB rate cuts in the September meeting. Traders see a 90% odds of a 25 bps cut in the deposit rate to 3.5% in September and see at least one more move before the end of the year.