EUR/USD drifts higher above 1.1650 as US CPI data support Fed rate cut bets

• EUR/USD rises to near 1.1685 in Wednesday's Asian session. 
• Investors expect imminent Fed cuts next month, which in turn drags on the US Dollar.
• The ZEW Survey of Expectations for August from the Eurozone and Germany came in weaker than expected. 

The EUR/USD pair gains momentum to around 1.1685 during the Asian trading hours on Wednesday. The US Dollar (USD) weakens against the Euro (EUR) amid rising bets of a Federal Reserve (Fed) rate cut in September. The speeches from Fed officials will be in the spotlight later on Wednesday, with Austan Goolsbee and Raphael Bostic set to speak. 

Tame reading on US inflation boosts expectations of a Fed rate cut next month, weighing on the Greenback. US inflation, as measured by the Consumer Price Index (CPI), stayed unchanged at 2.7% YoY in July, the US Bureau of Labor Statistics (BLS) reported on Tuesday. This figure came in below the market expectation of 2.8%. The core CPI, which excludes the volatile energy and food industries, rose by 3.1% YoY in July versus 2.9% seen in June and above the market consensus of 3.0%.

Concerns over Fed independence contribute to the USD's downside. White House spokeswoman Karoline Leavitt said on Tuesday that the US President Donald Trump was considering a lawsuit against Fed Chair Jerome Powell about his management of renovations at the Fed's Washington headquarters.

Across the pond, the downbeat ZEW Survey of Expectations for August from the Eurozone and Germany might cap the upside for the major pair. The Eurozone ZEW Economic Sentiment plunged to 25.1 in August from 36.1 in July, while Germany's ZEW Economic Sentiment fell to 34.7 in August versus 52.7 prior. Both readings came in worse than the estimations.