Euro and Pound Rise Following Release of US Inflation Data

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The EUR/USD and GBP/USD pairs continue to move higher, responding to weaker-than-expected US inflation figures and sustained demand for European currencies. Yesterday, the US dollar depreciated against the euro and the pound after the Bureau of Labor Statistics reported a slowdown in consumer price growth in July. The Consumer Price Index (CPI) rose by 2.7%, whereas the consensus forecast anticipated an acceleration to 2.8%. The decline in inflation was largely driven by a 9.5% year-on-year drop in petrol prices. However, core inflation, which excludes food and energy, increased to 3.1% (forecast = 3.0%), reflecting rising costs in services such as airfares, healthcare, and leisure.

Following the release, US Treasury yields declined, and interest rate futures priced in a 95% probability of a Federal Reserve rate cut next month, compared to 85% before the report. Political factors also weighed on the dollar — including the ongoing trade policy of Donald Trump’s administration and mounting criticism of the Fed.

EUR/USD
Technical analysis of EUR/USD points to a potential test of July highs, as a bullish harami candlestick pattern has formed on the daily chart. A reversal of the bullish scenario could be considered if the pair consolidates below 1.1580–1.1620.

Key events that may influence EUR/USD movements:

  • Today at 09:00 (GMT+3): Germany CPI
  • Today at 10:00 (GMT+3): Spain CPI
  • Today at 15:00 (GMT+3): Speech by FOMC member Thomas Barkin

GBP/USD
The GBP/USD pair has been strengthening for the second consecutive week after retesting the 1.3140 level and forming a bullish engulfing pattern on the daily chart. If the upward momentum continues, the price could rise towards 1.3530–1.3570. The nearest potential support for a downward correction lies in the 1.3420–1.3460 range.

Key events that may influence GBP/USD movements:

  • Tomorrow at 09:00 (GMT+3): UK GDP
  • Tomorrow at 09:00 (GMT+3): UK Manufacturing Output
  • Tomorrow at 15:30 (GMT+3): US Producer Price Index (PPI)