EUR/USD edges higher in a familiar range, hovers around mid-1.0500s as traders await US CPI
|- EUR/USD gains some positive traction on Tuesday amid a modest USD downtick.
- A generally positive risk tone undermines the safe-haven buck and offers support.
- The upside seems limited ahead of the US CPI and the crucial central bank meeting.
The EUR/USD pair attracts fresh buying on Tuesday and sticks to its modest intraday gains through the early European session. Currently placed around mid-1.0500s, spot prices, however, remain confined in a familiar range held over the past one-and-half week or so as traders await this week's key macro data and central bank meetings.
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 impetus to the EUR/USD pair ahead of the highly-anticipated FOMC monetary policy decision on Wednesday. This will be followed by the European Central Bank (ECB) meeting on Thursday, which should determine the next leg of a directional move for the major.
In the meantime, the easing of COVID-19 curbs in China remains supportive of a generally positive risk tone. This, in turn, is seen undermining the safe-haven buck and offering support to the EUR/USD pair. That said, worries about a deeper global economic downturn should keep a lid on the optimism. This, along with the uncertainty about the Fed's rate-hike path, might hold back traders from placing fresh bearish bets around the USD and act as a headwind for the major, at least for the time being.
In fact, market participants seem convinced that the US central bank will slow the pace of its policy tightening and have been pricing in a relatively smaller 50 bps lift-off in December. That said, the incoming positive US economic data has been fueling speculations that the Fed might lift rates more than recently projected. Apart from this, diminishing odds for another supersized 75 bps rate hike by the European Central Bank (ECB) should contribute to capping gains for the EUR/USD pair.
Even from a technical perspective, the recent range-bound price action and repeated failures near the 1.0600 mark warrant some caution for aggressive bullish traders. Hence, it will be prudent to wait for strong follow-through buying before positioning for any further appreciating move for the EUR/USD pair. Traders on Tuesday will now look to the release of the German ZEW Economic Sentiment Index for short-term impetus, though the focus will remain glued to the closely-watched US CPI report.
Technical levels to watch
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.