EUR/USD trades in a tight range near 1.0850 in Monday’s European session. The major currency pair struggles for direction as investors have sidelined ahead of the Eurozone preliminary Harmonized Index of Consumer Prices (HICP) for July and the Federal Reserve’s (Fed) monetary policy announcement on Wednesday.
The Eurozone inflation data will indicate whether market expectations for two more rate cuts by the European Central Bank (ECB) this year are appropriate. A few ECB policymakers are comfortable with speculation of two more rate cuts amid a dismal economic outlook and confidence that price pressures are on track to return to the desired rate of 2% next year.
Admitting to slower demand in the Eurozone’s largest nation, German Finance Minister Christian Lindner announced tax relief for corporations and households to spur spending and investment.
Annually, headline and core HICP, which excludes volatile items like food, energy, alcohol, and tobacco, are estimated to have decelerated to 2.3% and 2.8%, respectively.
Before the Eurozone inflation data, investors will focus on the preliminary Eurozone Q2 Gross Domestic Product (GDP) and inflation data of Germany and Spain, which will be published on Tuesday.
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