EUR/USD remained subdued around the mid-1.1500 area during Wednesday’s Asian session, August 12, as traders stayed cautious ahead of key inflation data from the US and Germany. The pair has traded within a narrow range over the past week as investors await fresh clues about the Federal Reserve’s interest-rate outlook.
The main focus is the US Consumer Price Index (CPI), due later today, followed by the Producer Price Index (PPI) on Thursday. Both reports could influence expectations for future Fed policy and the direction of the US Dollar.
Stronger-than-expected inflation could increase expectations for higher US interest rates, supporting Treasury yields and the USD. Softer inflation, meanwhile, could revive expectations for a less hawkish Fed and give EUR/USD more room to recover.
Geopolitical tensions are adding uncertainty to the currency market. Crude oil prices recently climbed to their highest level in around one and a half weeks amid renewed concerns over the Strait of Hormuz and attacks on shipping routes in the Red Sea and Bab el-Mandeb.
Higher oil prices can increase inflationary pressure and encourage central banks to maintain tighter monetary policy. At the same time, geopolitical uncertainty tends to support the US Dollar as a safe-haven asset. These factors are currently limiting EUR/USD’s upside potential.
Germany HICP in Focus
Germany’s Harmonized Index of Consumer Prices (HICP) for July will also attract attention. As the eurozone’s largest economy, Germany’s inflation data can influence expectations for European Central Bank policy.
A stronger reading could support the euro by signaling persistent inflationary pressure. However, the pair’s immediate direction is likely to remain heavily influenced by US Dollar movements and the upcoming US CPI report.
EUR/USD remains below key resistance levels. The 100-day Simple Moving Average is around 1.1567, while the 50% Fibonacci retracement stands near 1.1562. A sustained break above this zone could strengthen bullish momentum. On the downside, initial support is located around 1.1506, followed by 1.1437.
A break below 1.1506 could increase the risk of further losses, while a move above 1.1567 could open the door to additional gains. This setup matters because EUR/USD is consolidating ahead of data that could significantly change expectations for US monetary policy.
A hotter US CPI reading could strengthen the USD and pressure EUR/USD lower, while weaker inflation could reduce expectations for tighter Fed policy and support the pair.
Traders should watch 1.1562–1.1567 as the key resistance zone and 1.1506–1.1437 as the main support area. The reaction to US CPI, combined with movements in Treasury yields, oil prices and geopolitical risk, could determine the pair’s next major direction.
