EUR/USD churns in familiar territory ahead of EU inflation print

• EUR/USD struggles to find fresh bids as price action holds near 1.1150.
• Key EU inflation print due early Tuesday, investors on the lookout for looming NFP.
• Fed speakers knock back early expectations of further jumbo cuts.

EUR/USD cycled familiar territory to kick off the new trading, holding north of the 1.1100 handle but failing to find any new territory on the high end. An update on pan-EU inflation figures is due early during the Tuesday European market session, on the heels of European Central Bank (ECB) President Christine Lagarde cautioning that EU inflation is likely to dip below baseline levels before ticking back up later in the year.

Preliminary Harmonized Index of Consumer Prices (HICP) inflation from across the European continent is slated for Tuesday, with the headline HICP YoY print expected to dip to 1.9% on an annualized basis from the previous print of 2.2%. Despite the cooling in overall inflation, ECB President Lagarde noted that an uptick in October’s inflation figure can’t be ruled out as central bankers grapple with outsized expectations of rate cuts from market participants. On the US side, markets will be closely watching the lead-up to Friday’s US Nonfarm Payrolls (NFP) report for September.

Several Federal Reserve officials made announcements on Monday. Atlanta Fed President Raphael Bostic emphasized the importance of the jobs market and hinted at the possibility of further rate cuts based on economic data. Bostic specified that if the non-farm payroll (NFP) jobs report shows fewer than 100K net new jobs, it could prompt the Fed to take more aggressive action.

Following Bostic's comments, Fed Chair Jerome Powell stated that investors should not anticipate additional large rate cuts unless there is a significant downturn in US economic data. This statement caused the US dollar to strengthen and led rate traders to reassess their expectations for a 50 basis points rate cut in November. Powell indicated to investors that following the substantial rate cut in September, the Fed is likely to implement two more 25 basis points rate cuts in the near term, hobbling market expectations of a follow-up 50 bps rate trim in November.

EUR/USD price forecast

Things are getting messy on the Fiber chart with the pair cycling the 1.1150 region. Bulls and bears remain equally off-balance, despite EUR/USD’s recent rebound from September’s swing low toward the 1.1000 major price handle.

Despite repeated tests into fresh highs north of the 1.1200 handle last week, Fiber remains firmly constrained in a near-term consolidation trap, even as the 50-day Exponential Moving Average (EMA) limits downside potential from just below 1.1050.

EUR/USD daily chart