EUR/USD Pauses as Traders Await Eurozone Inflation Data
- EUR/USD lacks firm direction as traders await Eurozone inflation data before placing fresh bets.
- Fed Chair Jerome Powell’s hawkish remarks on Monday underpin the USD and cap the major.
- Bets for more rate cuts by the ECB contribute to keeping a lid on the pair ahead of the key data.
Current State of EUR/USD Pair
The EUR/USD pair is struggling to gain traction after pulling back from a 14-month peak just above the 1.1200 mark. It is currently oscillating in a narrow band around the 1.1135-1.1140 area in the Asian session on Tuesday. Traders are eagerly awaiting the release of Eurozone inflation data before making any significant moves.
Impact of Eurozone Inflation Data
The flash version of the Eurozone Consumer Price Index (CPI) is expected to show a decline below the European Central Bank’s (ECB) 2% target in September. This, coupled with a decrease in the German CPI to its lowest level since February 2021, reinforces expectations for a 25 bps rate cut at the upcoming ECB policy meeting in October. A higher reading may have a limited effect due to modest USD strength, indicating a potential upside for the EUR/USD pair.
Factors Affecting USD Strength
Fed Chair Jerome Powell’s hawkish stance on Monday, hinting at only two more 25 basis point interest rate cuts this year under normal economic conditions, has bolstered the USD. Additionally, geopolitical tensions in the Middle East are supporting the Greenback’s rebound from its lowest level since July 2023.
Upcoming Influential Events
Traders will be closely monitoring US economic data, including the ISM Manufacturing PMI and JOLTS Job Openings figures during the early North American session. Speeches by key FOMC members are expected to impact USD demand and provide momentum to the EUR/USD pair, which has been range-bound for the past two weeks. However, caution is advised for bullish outlooks given the recent struggles to surpass the 1.1200 mark.
Economic Indicator: Harmonized Index of Consumer Prices (YoY)
The Harmonized Index of Consumer Prices (HICP) measures changes in the prices of goods and services in the European Monetary Union. Released monthly by Eurostat, the HICP uses the same methodology across all member states and weights their contributions. The YoY reading compares prices to a year earlier, with higher readings viewed as bullish for the Euro (EUR) and lower readings as bearish.
Key Details:
- Next Release: Tue Oct 01, 2024 09:00 (Prel)
- Frequency: Monthly
- Consensus: 1.9%
- Previous: 2.2%
- Source: Eurostat