EUR/USD Price Forecast: Flattens around 1.1545 ahead of US Inflation data

• EUR/USD consolidates around 1.1545 in the countdown to the US CPI data and the ECB’s monetary policy.
• The US headline inflation is seen accelerating further to 4.2% YoY in May.
• Investors expect the ECB to raise its Deposit Facility Rate by 25 bps to 2.25%.

The EUR/USD pair trades in a tight range around 1.1545 during the Asian trading session on Wednesday. The major currency pair consolidates as the US Dollar (USD) trades calmly ahead of the United States (US) Consumer Price Index (CPI) data for May, which will be published at 12:30 GMT.

During press time, the US Dollar Index (DXY), which gauges the Greenback’s value against six major currencies, trades sideways near 99.96.

Investors will closely monitor the US inflation data to get fresh cues regarding the Federal Reserve’s (Fed) monetary policy outlook.

The US CPI report is expected to show that the headline inflation accelerated to 4.2% Year-on-Year (YoY) from 3.8% in April. In the same period, the core CPI – which excludes volatile food and energy items – is expected to have grown at an annualized pace of 2.9%, faster than the previous reading of 2.8%.

In the Eurozone, investors await the European Central Bank’s (ECB) monetary policy decision, which will be announced on Thursday. The ECB is expected to raise its key borrowing rates by 25 basis points (bps) and deliver a hawkish guidance on the monetary policy outlook, as inflationary pressures have accelerated due to elevated energy prices.

EUR/USD technical analysis

EUR/USD trades almost flat at around 1.1545 at press time. The near-term tone remains bearish as spot holds below the 20-period Exponential Moving Average (EMA) at 1.1611. The Symmetrical Triangle formation suggests that the overall trend is still sideways.

The Relative Strength Index (RSI) at 37.9 remains below the midline, hinting that downside pressure persists despite the pair hovering not far from recent lows.

On the downside, initial support is aligned with the rising trend line break area near 1.1502, where buyers have previously emerged. The pair could slide to the March 13 low at 1.1411 if it fails to hold the rising trend line. On the topside, the 20-day EMA at 1.1611 is the first resistance to clear, ahead of the more significant descending trend-line barrier near 1.1698; only a sustained move above these caps would ease the current bearish bias.

(The technical analysis of this story was written with the help of an AI tool.)