EUR/USD Trapped Ahead of ECB Hike and US Inflation Data

The EUR/USD exchange rate has been stuck in a tight range of 15 pips for two sessions, indicating that market participants are pricing in the upcoming European Central Bank (ECB) decision and the US Consumer Price Index (CPI) data.

The ECB is expected to hike its deposit facility rate by 25 basis points to 2.50% on Thursday at 12:15 GMT, but the market is split over whether this will be the last increase in the cycle or if there will be more to come.

Interest-rate markets are pricing a roughly 90% probability of a second increase before the end of the year, while economists surveyed by the ECB expect the deposit rate to finish at 2.50% by 2027.