EUR/USD Steady Amid Fed Uncertainty Ahead of US CPI Data
The EUR/USD pair remains relatively stable as investors await the US Consumer Price Index (CPI) data due on Wednesday. The pair is trading at around 1.1553, virtually unchanged from Monday's levels.
US payrolls for July came in weaker-than-expected, prompting traders to scale back expectations of a Federal Reserve rate hike at the September meeting. However, elevated oil prices are raising concerns that inflation could stay above the Fed's target for longer, preventing traders from fully ruling out a rate hike.
Analysts at ING highlight that with key July data now out of the way and August being 'typically a quiet month for European Central Bank communication', the ECB has effectively given markets 'a quasi-commitment to a September hike'. This limits the scope for fresh policy surprises from the Eurozone side in the near term.
ING argues that 'that leaves EUR/USD firmly dominated by the USD side of the equation' and notes that 'a softer US CPI print would increase the chances of a break above 1.160 already this week'. The next important resistance beyond that is the 200-day moving average at 1.1630.