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EUR/USD gains modestly near 1.1385 ahead of US CPI
Traders are also weighing fresh Middle East shipping and strike risks, which could favor the US dollar as a safe haven.
The EUR/USD pair is rising modestly around 1.1385 during Asian trading on Tuesday, with upside viewed as limited amid renewed US military strikes against Iran.
FXStreet notes that markets are expected to shift after the release of the US June Consumer Price Index inflation data later on Tuesday, which could shape expectations for the Federal Reserve’s next move. A softer CPI outcome would likely delay further US rate-hike expectations and put pressure on the US dollar versus the euro.
The report also points to heightened geopolitical risk after the US announced it is reinstating its blockade of Iranian maritime traffic and plans to impose a 20% toll on cargo shipped through the Strait of Hormuz. The US military has resumed strikes on Iran, including on Bandar Abbas and the Qeshm and Kish islands, while Iran struck two UAE tankers.
With tensions in the Middle East increasing, the newsletter upgrade highlights that safe-haven demand could boost the US dollar and act as a headwind for EUR/USD in the near term. The CPI release is therefore the key catalyst for how currency traders reassess rate expectations.
Latest closeEUR/USD 1.139 ▼0.4%