• EUR/USD gains ground ahead of the US inflation data release scheduled on Wednesday.
• The US Dollar depreciates as Treasury bonds extend decline amid rising odds of a Fed rate cut in September.
• Traders anticipate that the ECB will implement a 25 basis points rate cut at Thursday's meeting.

EUR/USD breaks its three-day losing streak, trading around 1.1050 during Wednesday’s Asian session. The upside of the EUR/USD pair is attributed to the subdued US Dollar (USD) ahead of the US Consumer Price Index (CPI) data scheduled to be released later in the North American hours. This inflation report may offer fresh cues regarding the potential magnitude of the Federal Reserve's (Fed) interest rate cut in September.

The US Dollar (USD) faces challenges as the US Treasury yields continue to decline. The US Dollar Index (DXY), which measures the value of the US Dollar against six other major currencies, halts its three-day winning streak. The DXY trades around 101.40 with 2-year and 10-year yields on US Treasury bonds standing at 3.57% and 3.62%, respectively, at the time of writing.

However, last week’s US labor market report raised uncertainty over the likelihood of an aggressive interest rate cut by the Federal Reserve (Fed) at its September meeting. According to the CME FedWatch Tool, markets are fully anticipating at least a 25 basis point (bps) rate cut by the Federal Reserve at its September meeting. The likelihood of a 50 bps rate cut has slightly decreased to 31.0%, down from 38.0% a week ago.