The EUR/USD pair posted modest gains on Thursday (July 31st), following a sharp sell-off over the past three days. The pair resumed its decline on Wednesday following strong US Gross Domestic Product (GDP) figures and a hawkish message from the Federal Reserve (Fed).

The euro (EUR) was trading at 1.1435 at the European market open, up from a seven-week low of 1.1400 reached after the Fed's monetary policy decision on Wednesday, but still on track for a 3% depreciation in July.

The US emerged as the best-performing nation in this eventful week. US data continued to show that the economy remains resilient, and the Federal Reserve maintained its cautious stance on interest rate cuts. At the same time, agreements with major US trading partners have eased some of the trade uncertainty that had hurt the US dollar earlier in the year.

On Wednesday, preliminary data released by the US Department of Commerce revealed that the economy grew more than expected in the second quarter, further justifying the Fed's decision to wait longer to better assess the impact of tariffs on the economy.

The Fed confirmed these expectations and maintained its benchmark interest rate, ignoring US President Donald Trump's calls for looser policy and providing little indication of the timing of the next rate cut. Investors reduced their expectations for Fed policy easing this year, and the US dollar continued to strengthen overall.

Thursday's focus will be on the US Personal Consumption Expenditures (PCE) Price Index, the Fed's preferred inflation gauge that may provide further insight into the central bank's monetary policy, ahead of Friday's all-important Nonfarm Payrolls report. (alg)

Source: FXstreet