FX rates EUR/USD have been unable to make a decisive move since the beginning of the week; market participants are taking a wait-and-see attitude ahead of the release of key US inflation data. According to FXStreet analyst Ehren Senzeger, the technical outlook suggests the pair could move in either direction.

“Although Reuters reported earlier in the day that eurozone money markets are now fully priced in a 50 basis point (bps) European Central Bank (ECB) rate hike in September, the single currency is struggling to attract buyers. German Finance Minister Christian Lindner said earlier in the day that Germany’s economic outlook looks fragile.

In the afternoon, the U.S. Bureau of Labor Statistics will release consumer price index (CPI) data for July. Annual inflation is expected to fall to 8.7% from 9.1% in June, while the core CPI, which considers volatile food and energy prices, will rise to 6.1% from 5.9%.

The forex eur usd live chart reaction to the inflation data should be fairly straightforward: a strong core CPI will cause the dollar to rally, while a weak one will dampen interest in the dollar. According to the CME Group FedWatch Tool, markets estimate a 66.5% chance that the Fed will decide to raise rates by 75 bps in September, suggesting that there is room for a significant US dollar index reaction if the data diverges from market consensus.”