EMU CPI Preview: what to expect of EUR/USD

The euro area will publish its advanced inflation figures for the current month later today. Market consensus expects headline consumer prices to rise at an annualized 0.3%, while Core prices are seen advancing 0.9% over the last twelve months.

Despite inflation has been meandering below the ECB’s 2% target for an extended period of time, the central bank still remains in a ‘wait-and-see’ mode while it continues to assess the last package of stimulus measures, and has so far kept ‘radio silence’ ahead of the upcoming meeting on September 8.

Regarding FX, EUR/USD has been trading lower in response to the strengthening of the greenback, as it has proved to be the almost exclusive driver of the pair’s price action. The pair’s inability to re-test or even attempt to surpass recent highs in the vicinity of 1.1370 open the door for a potential consolidative period ahead of a leg lower with the next target in the 1.0820 area, July’s low.