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Euro and pound pause as investors await Germany and US inflation data

EUR/USD is range-bound at 1.1570 to 1.1650, with direction likely to hinge on whether US headline and core CPI come in above or below forecasts.

Reported · Written up by our desk · Major Pairs

The euro and the pound are trading with subdued movement against the US dollar and have shifted into consolidation after recent price action, with traders holding off on new positions ahead of a fresh macro data calendar. Action Forex said the next major catalysts are Germany’s inflation figures and the United States CPI report, both of which could shift expectations for future central bank policy.

For Germany, annual CPI is forecast to rise to 2.9% from 2.8%, which could reinforce expectations of further tightening by the ECB and provide support for the euro. In the US, headline CPI is expected at 3.4% year on year and 0.4% month on month, while core CPI is forecast at 2.4% and 0.2% respectively, the report that Action Forex highlighted as the main driver for dollar direction after the prior employment data.

For the pound, the next UK catalyst is GDP data, with July GDP forecast to show no growth after expanding by 0.3% the prior month. Action Forex said weaker-than-expected UK figures could strengthen expectations for a more dovish Bank of England stance, weighing on GBP/USD’s recovery potential.

Action Forex also pointed to technical levels, noting EUR/USD has been consolidating within 1.1570 to 1.1650, where a break above 1.1650 could open the door to a retest of the August high near 1.1710, while a move below 1.1570 could push prices toward 1.1500. For EUR/USD, it said a Stick Sandwich pattern formed after a retest of 1.3470 on the daily chart, with gains potentially extending if 1.3500 flips to support, while a sustained move below 1.3470 would raise the risk of deeper downside.

Latest closeEUR/USD 1.164 ▲0.1%|GBP/USD 1.355 ▲0.1%

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