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Euro slides after benign US CPI shifts Fed rate bets

EUR/USD fell back to about 1.1522 after July US CPI came in slightly lower on both headline and core measures.

Reported · Written up by our desk · Major Pairs

FXStreet reports the euro reversed from a two day high of 1.1563 after the July US CPI looked less inflationary, prompting investors to reprice expectations for a Federal Reserve that would be less “hawkish.”

As a result, EUR/USD retreated to around 1.1522, down about 0.17% at the time of writing. The move also reflected shifting rate odds for September, with the chance of a Fed hold rising to 60% from 40% before the CPI release.

The US CPI for July was in line with expectations, with headline inflation easing to 3.4% year over year from 3.5%, and core CPI falling to 2.5% from 2.6%. In parallel, the eurozone reported Germany’s Harmonised Index of Consumer Prices in July held steady at 2.8% as expected, though analysts pointed to still rising energy prices as a key inflation driver.

FXStreet also noted upcoming eurozone data, including Spain inflation and EU industrial production, and said in the US, PPI alongside CPI could further shape the Fed’s rate path. On the pair’s technical picture, it cited support around 1.1514 to 1.1510 and potential deeper levels near 1.1466 and 1.1336, while resistance sits higher near 1.1849.

Latest closeEUR/USD 1.153 ▼0.2%

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