EUR/USD slips on Monday, paring recent gains ahead of US CPI inflation

EUR/USD eased back on Monday, dropping away from 1.0950 as investors gear up for Tuesday’s US Consumer Price Index (CPI) inflation. Germany’s final CPI inflation print early Tuesday is not expected to deviate meaningfully from preliminary figures.

Forex Today: Investors’ attention is expected to be on US CPI

The Euro (EUR) peaked at 1.0980 on Friday, but the pair is falling back as markets pivot to fresh inflation figures as investors continue to hope for signs of sooner rather than later rate cuts from central banks. According to the CME’s FedWatch Tool, markets are pricing in a 70% chance of a first rate cut at the Federal Reserve’s (Fed) June policy meeting.

February’s MoM US CPI is expected to tick upwards to 0.4% from 0.3% as lopsided inflation continues to weigh on the Fed’s rate cut outlook. Core MoM CPI is forecast to tick down to 0.3% from the previous 0.4%. YoY CPI is expected to hold steady at 3.1%, with Core annualized CPI forecast to print at 3.7%, down slightly from 3.9%.

US CPI Preview: Forecasts from 10 major banks, inflation still too high

Germany’s final CPI inflation print is expected to match the preliminary print, with Yoy German CPI inflation expected to come in at 2.5% in February. Germany’s Harmonized Index of Consumer Prices (HICP) is also expected to hold steady at 2.7% for the year ended in February.

EUR/USD technical outlook

EUR/USD is capped in the near-term by last Friday’s rise into 1.0980, but the pair shed weight back below 1.0950, and the immediate technical floor is priced in near 1.0880.

EUR/USD’s late decline on Friday ended a multi-week bull run, with the pair recovering from February’s bottom bids near 1.0700.

EUR/USD hourly chart

EUR/USD daily chart