• EUR/USD rises as increasing bets of a large cut by the Federal Reserve weigh on the US Dollar.
• The ECB said it remains data-dependent for further monetary policy action after Thursday’s cut.
• ECB's President Lagarde refrained from providing a specific interest-rate cut path.

EUR/USD jumps to near 1.1100 in Friday’s European session. The major currency pair rises as the Euro (EUR) strengthens following the European Central Bank’s (ECB) monetary policy announcement on Thursday, and the US Dollar (USD) weakens after soft United States (US) Producer Price Index (PPI) data for August. The ECB cuts its Rate On Deposit Facility by 25 basis points (bps) to 3.50%, as widely anticipated. 

The central bank was already expected to cut its key borrowing rates as the Eurozone economic outlook appears to have faltered due to a weak demand environment and price pressures in the old continent continue to decelerate.

The outlook of the Euro has improved due to the absence of a pre-defined interest rate cut path in the monetary policy statement and ECB President Christine Lagarde’s press conference. Comments from Lagarde indicated that the central bank will follow a data-centric approach, saying, "the interest rate decisions will be based on its assessment of inflation outlook in light of incoming economic and financial data, dynamics of underlying inflation and strength of monetary policy transmission," at the press conference.

For the remainder of the year, market participants see the ECB reducing interest rates one more time as price pressures are expected to soften further. In the late Asian session, ECB policymaker Joachin Nagel told German radio Deutschlandfunk, "We assume that core inflation will improve, especially with the declining wage trend in the Eurozone.”