EUR/USD Stuck in Neutral Amid Mixed Signals from Eurozone and Fed

The EUR/USD pair remains under pressure around $1.1530, $1.1540, but the fundamental picture is becoming less one-sided due to mixed signals from the eurozone and the United States.

August inflation in the eurozone accelerated to 3.3% year-over-year, mainly driven by a 14.3% jump in energy prices, according to Eurostat's preliminary estimate. However, core inflation excluding energy, food, alcohol, and tobacco stayed well below the headline rate at around 2.4%.

This mix of stable growth and high inflation leaves room for another rate hike from the European Central Bank (ECB), with Morgan Stanley predicting a possible 25 basis point increase in December to 2.75%. The euro is receiving some fundamental support, but it's not enough to overcome the dollar's advantage.

The Fed decision tomorrow will be a key catalyst for the dollar, and market expectations suggest around a 90% chance of a rate hike. Some analysts see up to three hikes by March, which would widen the yield gap in favor of the dollar.