• EUR/USD consolidates above 1.0900 as investors await July’s US CPI data for fresh guidance on the Fed’s interest-rate path.
• Market speculation for a 50 basis points interest-rate cut in September has diminished.
• ECB Rehn supports more rate cuts to boost Eurozone economic growth.

EUR/USD edges slightly lower but holds the key support level of 1.0900 in Tuesday’s European session. The major currency pair trades broadly sideways as investors appear to be sidelined ahead of the United States (US) Producer Price Index (PPI) data, which will be published at 12:30 GMT. 

The producer inflation data will indicate how much the prices of goods and services were changed by owners at factory gates. Generally, prices of final goods are influenced by input prices and consumer demand. 

Economists expect that monthly headline PPI barely rose last month. The core PPI, which excludes volatile food and energy prices, is expected to grow at a slower pace of 0.2% compared with the 0.4% increase seen in June. Annual headline and core PPI are estimated to have decelerated by three-tenths to 2.3% and 2.7%, respectively.

US PPI data is expected to have a limited impact on the US Dollar (USD) – unless the data diverge significantly from expectations – as the major trigger will be the Consumer Price Index (CPI) data for July, which will be published on Wednesday. The inflation data will significantly influence market speculation about the size and timing of interest rate cuts by the Federal Reserve (Fed) for the entire year.