EURUSD Hangs in Balance as US CPI Data Looms

The EURUSD is awaiting US CPI data on Wednesday, which could significantly impact expectations for the Federal Reserve's next meeting.

In recent days, market expectations for further rate hikes in the US have weakened due to weaker labor market data. The July ADP report showed just 44,000 new private-sector jobs, and the subsequent NFP report came in even weaker than expected, with nonfarm payrolls falling by 23,000.

If today's CPI comes in below expectations, it could further reinforce the view that the Fed will have little reason to raise rates again this year. On the other hand, a higher-than-expected inflation reading could quickly return the market to pricing in rate hikes.