EUR/USD Price Forecast: Flattens around 1.1545 ahead of US Inflation data

EUR/USD consolidates around 1.1545 in the countdown to the US CPI data and the ECB’s monetary policy.
The US headline inflation is seen accelerating further to 4.2% YoY in May.
Investors expect the ECB to raise its Deposit Facility Rate by 25 bps to 2.25%.

Sagar Dua FXStreet

The EUR/USD pair trades in a tight range around 1.1545 during the Asian trading session on Wednesday. The major currency pair consolidates as the US Dollar (USD) trades calmly ahead of the United States (US) Consumer Price Index (CPI) data for May, which will be published at 12:30 GMT.

During press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades sideways near 99.96.

Investors will closely monitor the US inflation data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook.

The US CPI report is expected to show that the headline inflation accelerated to 4.2% Year-on-Year (YoY) from 3.8% in April. In the same period, the core CPI – which excludes volatile food and energy items – is expected to have grown at an annualized pace of 2.9%, faster than the previous reading of 2.8%.

In the Eurozone, investors await the European Central Bank’s (ECB) monetary policy decision, which will be announced on Thursday. The ECB is expected to raise its key borrowing rates by 25 basis points (bps) and deliver a hawkish guidance on the monetary policy outlook, as inflationary pressures have accelerated due to elevated energy prices.

EUR/USD technical analysis

EUR/USD trades almost flat at around 1.1545 at press time. The near-term tone remains bearish as spot holds below the 20-period Exponential Moving Average (EMA) at 1.1611. The Symmetrical Triangle formation suggests that the overall trend is still sideways.

The Relative Strength Index (RSI) at 37.9 remains below the midline, hinting that downside pressure persists despite the pair hovering not far from recent lows.

On the downside, initial support is aligned with the rising trend line break area near 1.1502, where buyers have previously emerged. The pair could slide to the March 13 low at 1.1411 if it fails to hold the rising trend line. On the topside, the 20-day EMA at 1.1611 is the first resistance to clear, ahead of the more significant descending trend-line barrier near 1.1698; only a sustained move above these caps would ease the current bearish bias.

(The technical analysis of this story was written with the help of an AI tool.)

Economic Indicator

ECB Rate On Deposit Facility

One of the European Central Bank's three key interest rates, the rate on the deposit facility, is the rate at which banks earn interest when they deposit funds with the ECB. It is announced by the European Central Bank at each of its eight scheduled annual meetings.

AUD/USD consolidates above 0.7000; remains close to monthly top

AUD/USD holds steady above 0.7000 during the Asian session on Friday, trading just below the previous day's monthly low amid diverging forces. A hawkish RBA continues to support the Aussie, while the recent decline in US bond yields keeps the US Dollar depressed near a three-week low. However, oil-driven inflation fears reinforce Fed hike bets, which, along with geopolitical risks, could benefit the safe-haven buck and cap the currency pair.

USD/JPY bounces off one-month low; climbs to 157.00 amid reviving USD demand

USD/JPY rebounds from the 156.00 neighborhood, or a one-month low touched during Friday’s Asian session, with bulls looking to extend momentum beyond 157.00 amid the emergence of some US Dollar buying. Meanwhile, Japan's National CPI rose to a nine-month peak and reaffirmed BoJ rate-hike bets, which could support the Japanese Yen and cap gains for the currency pair.

Gold treads water around $4,000

Gold prices maintain its offered stance in place at the end of the week, hovering around the key $4,000 threshold per troy ounce. The persistent selling bias in the precious metal comes amid decent gains in the US Dollar and an acceptable rebound in US Treasury yields across the curve, all alongside further upside traction in crude oil prices.

Crypto Today: Bitcoin holds the 50-day EMA as Ethereum and XRP face structural resistance

Bitcoin gradually ticks up on Friday, trading above $81,000. The Crypto King has recently defended structural support near $80,000, reinforcing the prevailing bullish outlook. Ethereum similarly edges higher above $2,400, while Ripple trades above $1.32 after testing support around $1.30.

Week ahead – Central bank and earnings bonanza could roil markets

Fed, ECB and BoJ to sit on the sidelines after September hikes. But RBNZ and BoC poised to lift borrowing costs. Inflation data out of the US, Japan, Australia to also be important. UK budget: no surprises would be good news for the Pound.

What November 3 means for the Fed's rate path and the US Dollar

The USD faces a decisive period ahead of the November 3 midterm elections. While markets anticipate another interest rate increase from the Fed in December, the battle for control of Congress could reshape fiscal policy expectations and, indirectly, the path of US monetary policy in 2027.