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Euro seeks foothold ahead of US inflation data

The US currency hit a four-month high against the euro on Tuesday, August 10, down 0.14% to 1.1720. The EURUSD pair sank to an intraday low of 1.1710.

The greenback continues to draw support from hawkish comments by several Fed officials and Friday’s robust July NFP report. Traders have been pricing in expectations that a QE taper decision will be taken in the near future, while the Central Bank is seen raising rates in 2022.

Todays macro agenda

  • 15:30 US: CPI (July)
  • 17:30 US: EIA weekly petroleum status report, Fed member Raphael Bostic speech
  • 21:00 US: monthly budget statement (July)

Current outlook

By the time of writing, the euro was trading at 1.1707 as the single currency remains weak. The bulls have not even bought into the dip, with lackluster buying in the wake of taper talk from a number of Fed members.

Stateside, the inflation rate and core inflation for July are due out. This is the key event of the week, so FX traders should brace for heightened volatility at 12:30 GMT. If the two prints ​​(annual and monthly inflation readings) fall short of the median consensus, an upward rebound in the euro and a correction in the DXY index can be expected. If inflation rises, the euro could slide to 1.1690. The closest resistance levels are at 1.1735 and 1.1765.

After the CPI report, traders will shift their focus to PPI due out on Thursday. Then the next major market-moving event will be the Jackson Hole symposium.


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