EUR/USD strengthens to above 1.1650 on ECB's cautious stance

• EUR/USD gathers strength to around 1.1675 in Monday's early European session. 
• A potential US-Russia meeting and the ECB's cautious stance underpin the Euro. 
• Traders ramp up Fed rate cut bets after the weak US July job data. 

The EUR/USD pair climbs to near 1.1675 during the early European session on Monday. The Euro (EUR) strengthens against the US Dollar (USD) due to a potential meeting between US President Donald Trump and Russian President Vladimir Putin on Friday to end sanctions. Traders await the US Consumer Price Index (CPI) data for July, which is due later on Tuesday. 

Trump and Putin have agreed to hold a meeting in Alaska on Friday to discuss ways forward to end the war in Ukraine. Concerns grew after Trump set an August 8 deadline for Putin to agree to an immediate ceasefire or face more severe US sanctions. As the deadline hit, Trump instead announced he and Putin would meet in person on Friday. Optimism surrounding a possible meeting between the US and Russia might provide some support to the shared currency in the near term. 

Furthermore, economists pushed back expectations for another reduction in borrowing costs from the European Central Bank (ECB) by three months, according to the Bloomberg survey. This, in turn, contributes to the EUR's upside. Traders pared bets for a September cut and are only seeing odds of just over 50% for a quarter-point move at the end of the year.

Across the pond, dovish expectations of the US Federal Reserve (Fed) could drag the Greenback lower and create a tailwind for the major pair. Traders raise their bets on Fed rate reductions this year after last week's jobs report for July showed employers added fewer jobs than expected during the month. 

According to the CME FedWatch tool, markets are now pricing in nearly an 89% possibility of a Fed rate cut in September, with at least two rate cuts priced in by the end of the year.