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Euro holds near 1.1535 as US CPI looms, oil lifts risk

EUR/USD was about 1.1535, moving away from a seven-week high as elevated oil prices and Fed hawkish comments supported the US dollar.

Reported · Written up by our desk · Major Pairs

EUR/USD traded around 1.1535 on Tuesday, down about 0.06% on the day, as traders weighed geopolitical uncertainty in the Middle East and an upcoming US inflation report. The pair moved further from a recent seven-week high of 1.1581 amid a stalemate between the United States and Iran tied to possible reopening of the Strait of Hormuz.

FXStreet said oil prices were rising, with West Texas Intermediate around $82.50, as shipping through key routes including the Strait of Hormuz and the Bab el-Mandeb Strait remained restricted. The outlet linked higher energy costs to a negative factor for the euro, given the Eurozone's dependence on energy imports.

In the US, support for the dollar came from hawkish remarks attributed to Cleveland Fed President Beth Hammack, who said policy is not hurting the economy and that more than one interest rate hike may be needed to return inflation to target. Traders are now focused on US Consumer Price Index data for July due Wednesday, with expectations for headline inflation to ease to 3.4% year over year and core inflation to fall to 2.5% year over year.

FXStreet noted that an upside CPI surprise could reinforce expectations for tighter monetary policy and support the US dollar, while softer-than-expected data could renew pressure on the currency. The report said the debate over the Fed's next decision in September has left market participants divided.

Latest closeEUR/USD 1.155 ▲0.2%

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