U.S. Building Permits, Industrial Production, FOMC Members Speak

On Tuesday, the EUR/USD remained close to 1.0900, with market attention focused on the possibility of a September rate cut following weaker US Retail Sales figures for June.

Traders are anticipating up to three quarter-point cuts from the Federal Reserve starting in September. Meanwhile, the upcoming European Central Bank rate decision on Thursday adds to the market uncertainty. In June, US Retail Sales stagnated at 0.0%, in line with expectations and down from the revised 0.3% in the previous month. This, combined with a recent slowdown in Consumer Price Index (CPI) data, has increased the likelihood of a September rate cut.

The ECB is expected to keep rates unchanged on Thursday, waiting for further data following a previous quarter-point cut in June.

Gold prices surged by over 1% and reached a new all-time high on Tuesday, with investors turning to the precious metal as a safe-haven asset following remarks from Federal Reserve officials that solidified expectations of an impending U.S. interest rate cut in September.

Federal Reserve Chair Jerome Powell's statement on Monday, highlighting that recent inflation data supported policymakers' confidence that price pressures will remain subdued, reassured markets about the likelihood of a U.S. rate cut next month.

San Francisco Fed Bank President, Mary Daly, also expressed optimism, stating that "confidence is growing" regarding inflation's trajectory towards the U.S. central bank's 2% target.

Oil prices experienced a decline of over 1% on Tuesday, marking the third consecutive day of losses. The decrease was attributed to concerns about the impact of a slowing Chinese economy on demand. However, the downward trend was offset by the growing consensus that the U.S. Federal Reserve might initiate a reduction in its key interest rate as early as September.

Ongoing reports of weaker economic data from China were accompanied by disappointments regarding the government support programs, resulting in a reduction in fuel demand from China's refineries. In the U.S., crude oil inventories reportedly decreased by 4.4 million barrels last week, surpassing the market's expectations. According to sources citing figures from the American Petroleum Institute, an average decrease of 33,000 barrels was anticipated last week, as indicated by a Reuters poll conducted on Tuesday.

US 30 and US 500 closed the session on a high note, driven by strong retail sales data and a wave of predominantly positive quarterly earnings reports from companies. However, US Tech 100 experienced losses as major technology stocks continued to pull back ahead of key earnings releases from the sector this week.

The surge in earnings, growing confidence in the U.S. economy, and expectations of lower interest rates prompted traders to shift away from tech heavyweights and towards sectors more sensitive to economic conditions.

Furthermore, Wall Street banks maintained strong earnings performance, with Bank of America jumping 5% following second-quarter revenue and profit that surpassed expectations, driven by increased investment banking and asset management fees.