Forex overview. EUR/USD at a Tipping Point: Key Levels to Watch Ahead of CPI Print – ForexNews.PRO
At the beginning of the month, the EUR/USD pair experienced a significant increase following disappointing US labor market data. Since then, it has stabilized within the range of 1.16 to 1.17 as the market anticipates new catalysts for direction, with today’s US inflation data potentially acting as a major influence.
If the inflation figures align closely with expectations and do not exceed them significantly, there’s a strong likelihood that the Federal Reserve will lower interest rates by 25 basis points at its upcoming September meeting. Concurrently, reports suggest that Christopher Waller, known for his dovish stance, is a frontrunner to succeed Jerome Powell as Fed Chair when his term concludes next year.
Geopolitical Tariff Tensions Remain Elevated
Amidst the anticipated Trump-Putin meeting in Alaska, the US President has opted to extend reduced tariffs on China for an additional 60 days, providing a temporary boost to the US dollar. This development is encouraging for markets in the near term; however, the tariff issue may resurface as the new deadline approaches. The Alaska meeting marks the first interaction between the US and Russian Presidents since June 2021, likely attracting significant global attention, including from financial markets.
Considering the intricacies of the situation, predicting specific market outcomes is challenging. Investors are also keeping an eye on a vote in Kyiv, which could indicate whether hostilities will persist or if opportunities for a ceasefire are increasing. While peace would likely benefit stock markets, both the euro and the US dollar could gain in forex trading, rendering the overall impact on the primary currency pair uncertain.
Anticipating US Inflation Data
Today’s key highlight in the economic calendar is the release of US inflation data, with forecasts indicating a modest year-on-year rise in both the headline and core metrics.
Should the inflation figures align with this consensus, they are unlikely to significantly alter the probability of an interest rate cut at the forthcoming Federal Reserve meeting, which currently stands just above 80%.
The main impetus behind expectations for a rate cut next month stems from the recent labor market data—closely monitored by Fed officials—which was disappointing, particularly due to downward adjustments in previous months’ figures.
EUR/USD Technical Analysis
In advance of critical geopolitical events and economic data releases, the EUR/USD exchange rate remains slightly above the 1.16 threshold. A decisive movement outside the 1.16–1.1660 range may indicate the next short-term trend. A downward breach could result in a sustained decline, potentially leading to a test of the 1.14 support level.
