EUR/USD falls to near 1.1650 ahead of German Retail Sales, CPI data

• EUR/USD depreciates as traders adopt caution ahead of Germany’s key economic data.

• Traders will likely observe the July US Personal Consumption Expenditures Price Index data later in the North American session.

• Fed concerns have deepened after US Vice President Vance confirmed the end of the central bank’s autonomy.

EUR/USD loses ground after three days of losses, trading around 1.1660 during the Asian hours on Friday. Traders await July Retail Sales and August preliminary Consumer Price Index (CPI) data from Germany later in the day. Focus will shift toward the July US Personal Consumption Expenditures (PCE) Price Index data due in the North American session.

The EUR/USD pair depreciates as the US Dollar (USD) recovers ground, as the United States (US) economy grew in the second quarter. US Gross Domestic Product (GDP) Annualized climbed 3.3% in Q2, a faster pace than the initially estimated 3.1% increase and 3.0% prior.

However, the US Dollar may face challenges amid renewed dovish sentiment surrounding the Federal Reserve (Fed) policy outlook. Fed Governor Christopher Waller said on Thursday that he would support an interest-rate cut in the September meeting and further reductions over the next three to six months to prevent the labor market from collapsing, per Reuters.

The concerns over Fed independence have increased following the recent remarks from US Vice President JD Vance. Vance confirmed, in an interview with USA Today on Thursday, the end of the Federal Reserve’s autonomy. He noted: "I don't think we allow bureaucrats to make decisions about monetary policy and interest rates without any input from the people that were elected to serve the American people...POTUS is much better able to make these determinations."

The European Central Bank’s (ECB) July Meeting Minutes indicated that policymakers saw risks tilted to the downside over the next two years, citing weaker growth prospects and the impact of US tariffs. However, some members cautioned that longer-term risks could lean to the upside, particularly amid uncertainties surrounding energy and currency fluctuations.