EUR/USD weakens below 1.1700 as traders brace for US ISM Manufacturing PMI data

• EUR/USD loses traction to around 1.1695 in Tuesday's Asian session. 
• Persistent Russia-Ukraine geopolitical tensions and fears of a new political crisis in France undermine the Euro. 
• Dovish tone of the Fed might help limit the pair's losses. 

The EUR/USD pair loses momentum to around 1.1695, snapping the three-day winning streak during the Asian trading hours on Tuesday, pressured by a firmer US Dollar. The preliminary reading of the Eurozone Harmonized Index of Consumer Prices (HICP) and the US ISM Manufacturing Purchasing Managers Index (PMI) for August will be in the highlights later on Tuesday.

The Euro (EUR) weakens against the US Dollar (USD) amid the persistent Russia-Ukraine conflict. Russian drone attacks on power facilities in northern and southern Ukraine on Sunday left nearly 60,000 customers without electricity, per the Guardian. 

Meanwhile, Ukrainian President Volodymyr Zelenskyy vowed to retaliate by ordering more strikes deep inside Russia. Ongoing conflict between Russia and Ukraine implies higher energy costs and increases geopolitical uncertainty in the Eurozone, which generally exerts some selling pressure on the EUR. 

Furthermore, the French Prime Minister François Bayrou will hold a confidence vote on September 8, bringing back fears of recession. Opinion polls from Reuters showed that most French people now want new national elections, pointing to deepening dissatisfaction with politics and a risk of lasting uncertainty. This, in turn, might drag DXY lower in the near term. 

Across the pond, dovish remarks from a Federal Reserve (Fed) official last week have indicated a potential shift in policy, acknowledging slowing economic activity. This, in turn, might weigh on the Greenback. Market probabilities, as indicated by the CME FedWatch Tool, have recently shown a high chance, nearly 89% of a 25 basis points (bps) rate cut in September, though this fluctuates based on new information.