As traders wait for U.S. inflation figures to come out, the EUR/USD stays close to a two-month low, trading just below the mid-1.0900s. Investors are becoming more wary because they think the pair could go down even more based on the U.S. Consumer Price Index (CPI) report, which will affect what the Federal Reserve does next with monetary policy.
Concerns about slow economic growth in the Eurozone and a higher U.S. dollar, which is caused by rising U.S. Treasury yields, have put pressure on the euro in recent sessions. The dollar has been strong because people think the Federal Reserve may keep interest rates high if inflation stays high. This would keep the dollar strong and hurt the euro.
The fact that the EUR/USD pair is currently below 1.0950 shows that market sentiment is still cautious, as the pair is failing to gain momentum. Traders are very interested in the U.S. CPI data that will be released later this week because it could show very clearly whether price pressures are easing or staying the same. If the CPI reading is higher than predicted, it could make people think that the Fed will raise rates again, which would put more downward pressure on the euro.
There are also signs that the Eurozone economy is slowing down, which has led the European Central Bank (ECB) to say that it may be nearing the end of its rate-hiking cycle. While the Fed and ECB have different goals for monetary policy, this difference has made the EUR/USD go down.
The EUR/USD is still being affected by larger market forces at the moment. Traders are waiting for the U.S. inflation report to see what will happen next. If the euro falls even more, the pair could test lower support levels. If economic data from both sides of the Atlantic continues to differ, this could push the pair even further into bearish territory.
