The Euro remains well supported against the US dollar on Tuesday and is making a run for the 1.06 mark as we enter today’s European session, but the currency is however unlikely to break this level as traders wait for the release of key data today, and especially from the US
Market participants will confront the release of the latest US consumer inflation figures later during the early North American session on Tuesday. The crucial US CPI report will play a key role in driving the US Dollar demand and provide some insight on the next rate hike from the US Federal reserve on Wednesday which will be followed by the European Central Bank (ECB) meeting on Thursday, which should determine the next big move.
The market consensus is a 50-basis point rate hike from the Fed which is less than the 4 previous rate hikes of 75 basis points and may be the beginning of the end of the Fed’s latest rate hiking cycle which will prove to be very supportive for the Euro
CPI figures from Germany released around 30 minutes ago came in at 11.3 percent on a yearly basis which shows that inflation in the Euro block is still running wild and will ensure another 50-basis point hike from the European central bank when they deliver their rate decision latest this month.
Looking further ahead today, the main drivers of the EUR/USD currency pair will be the release of the Zew economic survey from Germany which is a key indicator of business confidence and may provide a little bit of movement.
Traders however are unlikely to place too many long bets against the US dollar as they wait for the release of inflation figures from the US and the news should drive the direction of the currency pair for the rest of the week.