US Inflation Report to Decide Fate of EUR/USD and GBP/USD

The EUR/USD and GBP/USD pairs are holding steady against the US dollar after recent gains, but market participants are waiting for the release of the July US inflation report to make any new moves.

Forecasters predict a slowdown in annual inflation to 3.4% from 3.5%, with monthly prices expected to rise by 0.1% following a previous drop of 0.4%. Core CPI is forecast at 2.5% year-on-year and 0.2% month-on-month.

Weaker-than-expected US inflation data could strengthen expectations of monetary policy easing by the Federal Reserve, putting additional pressure on the dollar. On the other hand, if inflation comes in above forecasts or proves more persistent, the US currency could receive fresh support.