EUR/USD consolidates above 1.1800 as trades await Eurozone CPI and US data

The EUR/USD pair struggles to capitalize on the previous day's modest bounce from the 1.1780-1.1775 area, or over a one-week low, and oscillates in a narrow band during the Asian session on Wednesday. Spot prices currently trade around the 1.1815 zone, nearly unchanged for the day, as traders keenly await the release of the flash Eurozone consumer inflation figures.

The preliminary estimate is expected to show that the Harmonized Index of Consumer Prices (HICP) fell to the 1.7% YoY rate in January from 1.9% in the previous month, while the core gauge is seen holding steady at 2.3% YoY. The European Central Bank (ECB) views this as a temporary deviation, suggesting no immediate adjustments to monetary policy. Nevertheless, the data could influence the shared currency and provide some impetus to the EUR/USD pair.

Later during the North American session, traders will take cues from the US ADP report on private-sector employment and the US ISM Services PMI, which might further contribute to producing short-term opportunities. The immediate market reaction to the releases, however, is more likely to be limited as the focus will remain glued to the highly anticipated ECB policy meeting on Thursday. The outcome will play a key role in driving the EUR/USD pair in the near term.

In the meantime, a slight deterioration in the global risk sentiment offers some support to the safe-haven US Dollar (USD) and acts as a headwind for the currency pair. That said, the growing acceptance that the US Federal Reserve (Fed) will cut rates two more times in 2026 could cap the USD and support the EUR/USD pair. This warrants caution before positioning for an extension of the EUR/USD pair's  pullback from the highest level since June 2021, touched last week.