EUR/USD Under Pressure as Treasury Selloff and Weak Inflation Data Weigh on Euro

The EUR/USD currency pair has been under pressure since September 1, trading around 1.1600 after Friday's sharp decline and an unsuccessful attempt to recover above 1.1620. The sellers have retained their advantage as the price remains below the short-term moving averages, and technical indicators suggest a break below the 1.1580-1.1590 support area could lead to a move toward 1.1560-1.1540. Eurozone inflation data are mixed, with harmonized inflation in Germany accelerating to 2.9% y/y in August from 2.8%, but core inflation remaining at 2.4%. The market is awaiting the eurozone-wide August CPI estimate, which could cement expectations for a 25 bp ECB rate hike in September. However, a weak underlying inflation reading could limit further tightening expectations. Meanwhile, the Treasury selloff has pushed the 10-year Treasury yield to around 4.79%, the highest level in almost 20 months, supporting the dollar's advantage over the euro.