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Euro steadies near 1.1553 as Fed expectations hinge on upcoming US CPI

EUR/USD is holding in a tight range for more than a week, with markets pricing about a 44% chance of a September Fed hike via the CME FedWatch Tool.

Reported · Written up by our desk · Major Pairs

EUR/USD was little changed on Monday, trading around 1.1553 as the US dollar steadied after its post-NFP weakness, according to FXStreet. The euro and dollar were both caught in subdued price action, with the US Dollar Index hovering near 99.70.

FXStreet said the market pause reflects uncertainty over the Federal Reserve’s monetary policy path after weaker-than-expected July Nonfarm Payrolls prompted traders to scale back expectations for a September rate hike. Still, firmer oil prices linked to uncertainty around the reopening of the Strait of Hormuz are complicating the inflation outlook, leaving investors unable to fully rule out another hike.

FXStreet added that attention now turns to US Consumer Price Index data due on Wednesday, where a softer print could further reduce the probability of a September move and weigh on the dollar. The outlet noted that CME FedWatch pricing still points to roughly a 44% chance of a September hike.

On the currency-policy side, FXStreet cited ING commentary that July’s key data is already out and that August is typically quieter for European Central Bank communication. ING also said the ECB has effectively signaled a September hike, limiting the potential for Eurozone-related policy surprises in the near term.

Latest closeEUR/USD 1.152 ▼0.3%|Dollar index 99.98 ▲0.3%

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