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EUR/USD holds near 1.1550 after US CPI matches expectations
US CPI cooled to 3.4% year over year in July, leaving the dollar reaction subdued and keeping the ECB tightening outlook for September as a key driver.
EUR/USD was little changed around 1.1550 on Wednesday, after US inflation data failed to surprise markets and triggered only a brief spike in volatility. The pair was up about 0.08% on the day at the time of writing, before returning to pre-release levels.
The US CPI slowed to 3.4% year over year in July from 3.5% in June, while monthly inflation rose 0.1% after a 0.4% decline in June, according to the Bureau of Labor Statistics. Core CPI increased 0.2% month over month and 2.5% year over year, with the data aligned with market forecasts. FXStreet said the US dollar response remained subdued because the figures did not meaningfully shift expectations for Federal Reserve policy.
On the euro side, German inflation data offered limited support. Germanys Harmonized Index of Consumer Prices rose 2.8% year over year in July, up from 2.4% in June, with energy prices accounting for much of the acceleration, while core inflation excluding food and energy also moved higher to 2.6% from 2.5%. The stronger inflation picture reinforces expectations of a possible European Central Bank tightening in September, but FXStreet noted that a risk-averse mood is also weighing on EUR/USD.
The article pointed to renewed concerns around the Middle East, including reports of attacks on vessels attempting to cross the Straits of Hormuz and Bab el-Mandeb and renewed attention on US-Iran talks. Reuters reported that a senior Iranian source said no discussions are currently underway about extending the ceasefire, and the piece also cited a US comment from President Donald Trump urging Tehran to pay reparations to victims of attacks linked to the Islamic Republic, factors that kept euro gains limited.
Latest closeEUR/USD 1.155 ▼0.1%