- EUR/USD lacks firm direction as traders await Eurozone inflation data before placing fresh bets.
- Fed Chair Jerome Powell’s hawkish remarks on Monday underpins the USD and caps the major.
- Bets for more rate cuts by the ECB contribute to keeping a lid on the pair ahead of the key data.
The EUR/USD pair struggles to gain any meaningful traction following the previous day's pullback from the vicinity of the 14-month peak – levels just above the 1.1200 mark and oscillates in a narrow band during the Asian session on Tuesday. Spot prices currently trade around the 1.1135-1.1140 area, nearly unchanged for the day as traders keenly await the release of the Eurozone inflation data before placing directional bets.
The flash version is expected to show that the Eurozone Consumer Price Index (CPI) probably fell below the European Central Bank's (ECB) 2% target in September. Against the backdrop of a fall in the German CPI to the lowest level since February 2021, a softer Eurozone CPI print will reaffirm bets for a 25 bps rate cut at the next ECB policy meeting in October. Conversely, the reaction to a higher reading is likely to remain limited amid a modest US Dollar (USD) strength, suggesting that the path of least resistance for the EUR/USD pair is to the upside.
The Federal Reserve (Fed) Chair Jerome Powell adopted a more hawkish tone on Monday and said that he sees only two more 25 basis point interest rate cuts this year as a baseline if the economy performs as expected. Investors were quick to react and pared bets for a more aggressive policy easing by the US central bank. This, along with the risk of a further escalation of geopolitical tensions in the Middle East and a broader conflict in the region, assists the safe-haven Greenback to build on the previous day's goodish rebound from its lowest level since July 2023.
Later during the early North American session, traders will take cues from the US economic docket – featuring the release of the ISM Manufacturing PMI and JOLTS Job Openings data. Apart from this, speeches by a slew of influential FOMC members will drive the USD demand and provide some meaningful impetus to the EUR/USD pair, which remains confined in a familiar range held over the past two weeks or so. Nevertheless, the fundamental backdrop, along with the recent repeated failures to find acceptance above the 1.1200 mark warrant caution for bulls.
Economic Indicator
Harmonized Index of Consumer Prices (YoY)
The Harmonized Index of Consumer Prices (HICP) measures changes in the prices of a representative basket of goods and services in the European Monetary Union. The HICP, released by Eurostat on a monthly basis, is harmonized because the same methodology is used across all member states and their contribution is weighted. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is seen as bullish for the Euro (EUR), while a low reading is seen as bearish.
Read more.Next release: Tue Oct 01, 2024 09:00 (Prel)
Frequency: Monthly
Consensus: 1.9%
Previous: 2.2%
Source: Eurostat
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD accelerates losses to 1.0930 on stronger Dollar
The US Dollar's recovery regains extra impulse sending the US Dollar Index to fresh highs and relegating EUR/USD to navigate the area of daily troughs around 1.0930 in the latter part of Friday's session.
GBP/USD plummets to four-week lows near 1.2850
The US Dollar's rebound keep gathering steam and now sends GBP/USD to the area of multi-week lows in the 1.2850 region amid the broad-based pullback in the risk-associated universe.
Gold trades on the back foot, flirts with $3,000
Gold prices are accelerating their daily decline, steadily approaching the critical $3,000 per troy ounce mark as the Greenback's rebound gains extra momentum and US yields tighten their retracement.
Can Maker break $1,450 hurdle as whales launch buying spree?
Maker holds steadily above $1,250 support as a whale scoops $1.21 million worth of MKR. Addresses with a 100k to 1 million MKR balance now account for 24.27% of Maker’s total supply. Maker battles a bear flag pattern as bulls gather for an epic weekend move.
Strategic implications of “Liberation Day”
Liberation Day in the United States came with extremely protectionist and inward-looking tariff policy aimed at just about all U.S. trading partners. In this report, we outline some of the more strategic implications of Liberation Day and developments we will be paying close attention to going forward.
The Best brokers to trade EUR/USD
SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.