Dollar Set to Regain Ground Amid US Inflation Data Release

The US dollar is expected to regain ground as inflation data is released on August 12. According to Bloomberg analysts, a slowdown in consumer price growth is likely due to labor costs rising more slowly than labor productivity and the impact of tariffs fading.

Oil prices are also lower than they were in May, which may have marked the peak in CPI growth. However, the escalation of the conflict in the Middle East suggests that the slowdown in inflation could be temporary.

The EUR/USD pair has been retreating for three consecutive days after hitting a three-week high following the US labor market data. A failed test of 1.1565 could provide a reason to sell the EUR/USD, which would trigger a reversal and renewed selling pressure.