EUR: Going Along for the Ride Ahead of US CPI Data

EUR: Going along for the ride

Yesterday's price action was a little strange. EUR/USD opened bid in Europe, but spent the rest of the session edging lower even though the US NFIB pricing intentions survey did dip as we expected. EUR/USD opens Europe bid again today and as above, the US CPI print is going to be the main story. This may be one of the next chances that EUR/USD has of breaking above 1.1100 this month.

One side issue here. Tomorrow sees eurozone finance ministers meet in the Eurogroup format. On the agenda is fiscal policy for 2024, which given the inflation problem, might be more minded to bring forward fiscal consolidation and a return of the Stability and Growth Pact budget constraints. Tighter fiscal policy could see ECB tightening expectations priced lower and perhaps see the euro underperform a little - albeit in a potentially soft dollar environment.  

Also, today look out for a speech from ECB Chief Economist Philip Lane at 15:45 CET. Let's see whether he supports market pricing of two more 25bp ECB hikes later this year.

 We favour a little more EUR/USD upside today - but that's very much dependent on the US CPI data.