The euro registers modest losses against the US dollar on Tuesday as market participants await the release of the US Consumer Price Index (CPI) on Wednesday, which is expected to influence the trajectory of US monetary policy. The EUR/USD pair trades around 1.1541, remaining below the 100-day Simple Moving Average (SMA) at approximately 1.1567.
EUR/USD Consolidates Near 1.1540 Amid Awaited Inflation Data and Escalating Middle East Conflict
Traders continue to assess developments related to the ongoing Middle East conflict. Geopolitical tensions persist as the United States intercepted a vessel attempting to break the blockade imposed on Iran, while the Houthis claimed an attack on a Saudi military ship in the Strait of Bab el-Mandeb.
As a result, West Texas Intermediate (WTI), the US crude oil benchmark, climbs more than 1.30% to reach $83.40 per barrel, driven by concerns that a swift resolution to the regional conflict remains unlikely.
Meanwhile, all eyes turn to the upcoming US inflation data on Wednesday. Analysts anticipate that headline CPI will ease slightly from 3.5% to 3.4% year-over-year, with core figures projected to decline from 2.6% to 2.5% in the twelve months leading up to July.
Adding to the economic calendar, the US Producer Price Index (PPI) scheduled for Thursday, alongside the CPI figures, may provide further clarity on the Federal Reserve’s stance on interest rates.
Federal Reserve officials continue to prioritize price stability. Speaking with Wired, Chicago Fed President Goolsbee emphasized that inflation—not employment or industrial output—remains the primary economic concern. He described the labor market as stable yet not overly robust, suggesting cautious optimism.
Earlier data releases showed that the ADP Employment Change four-week average pointed to the addition of 8,250 jobs, revising down the prior reading by 4,000 to 11,000. Meanwhile, US Existing Home Sales declined by 1.7%, pressured by rising prices exacerbated by geopolitical uncertainty.
In European markets, economic indicators were sparse on Tuesday, though investors are set to monitor Germany’s Harmonised Index of Consumer Prices (HICP) release on Wednesday for July.
EUR/USD Technical Outlook
On the daily timeframe, EUR/USD hovers around 1.1542, having cleared above the former descending trendline near 1.1517 and the upper boundary of the descending channel around 1.1513, both now serving as immediate support levels. The pair also remains above the convergence of the 50-, 100-, and 200-day simple moving averages clustered near 1.1468, signaling a positive short-term bias. Furthermore, the 14-day Relative Strength Index (RSI), hovering near 59, indicates upward momentum without reaching overbought territory.
To the downside, initial support lies at the broken trendline around 1.1517, followed by the channel top near 1.1513, then the SMA cluster around 1.1468, and finally the channel floor at approximately 1.1339. On the upside, resistance is first encountered at the key horizontal level of 1.1849; a decisive break above this point could accelerate gains toward a broader recovery phase for the currency pair.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
