• EUR/USD drops to near 1.0700 amid uncertainty ahead of US core PCE Inflation data for May.
• The US Dollar exhibits strength on the Fed’s hawkish remarks.
• The near-term outlook of the Euro is uncertain ahead of French elections and the Eurozone preliminary HICP.

EUR/USD edges down to near the crucial support of 1.0700 in Friday’s European session. The major currency pair corrects modestly as the market sentiment is slightly cautious ahead of the United States (US) core Personal Consumption Expenditure price index (PCE) data for May, which will be published on Friday at 12:30 GMT.

The underlying inflation data would influence market speculation on the Federal Reserve (Fed) reducing interest rates from the September meeting, according to the CME FedWatch tool, which also shows that there will be two rate cuts this year. Contrary to market expectations, Fed officials see only one rate cut this year as signaled in the latest dot plot.

On Thursday, Atlanta Fed Bank President Raphael Bostic said rate cuts would become appropriate when they are convinced that inflation is on a clear path towards 2%. When asked about a concrete timeframe for rate cuts, Bostic said "I continue to believe conditions will likely call for a cut in the federal funds rate in the fourth quarter of this year," Reuters reported.

The US PCE report is expected to show that core price pressures grew at a slower pace of 0.1% against 0.2% in April month-on-month. Annually, the underlying inflation is projected to have decelerated to 2.6% from 2.8% in April.