EUR/USD: Euro Steady and Boring Near $1.14. Can US Inflation Data Stir the FX Board?

Greenback is winning all over the place. The euro is down, the British pound is down, and the Japanese yen? Way down.

💵 Dollar Keeps Calling the Shots

• The EURUSD spent Tuesday morning doing its best impression of wet paint, hovering around $1.1380-$1.1400 as traders waited for the next big catalyst. Sometimes, the biggest market move is... waiting for the market to move.
• The broader trend, however, has been anything but flat. Since peaking just below $1.21 in late January, the euro has lost roughly 6% against the dollar as expectations for higher US interest rates boosted demand for the greenback.
• Higher interest rates typically strengthen a currency because they offer investors better returns on cash and fixed-income assets. That's been the dollar's biggest tailwind in recent months.

🌍 Dollar Winning Across FX

• The dollar's strength isn't just a euro story. The GBPUSD remains in a broader downtrend near $1.34, even though the pound has managed a short-term bounce of about 1.5% amid political reshuffling in the UK.
• The biggest casualty remains the Japanese yen. The USD/JPY continues trading above ¥162, keeping the currency near 40-year lows and firmly inside the zone where traders suspect Japanese officials could intervene.
• In other words, this isn't euro weakness in isolation. Rather, it's broad-based dollar strength, with nearly every major currency feeling the pressure.

📊 CPI Holds the Remote Control

• The next headline event arrives with the US Consumer Price Index (CPI). Economists expect annual inflation to ease to 3.8% in June from 4.2% in May, though the report still has plenty of room to surprise.
• Fed Governor Christopher Waller said this week that another rate hike should remain on the table if inflation refuses to cooperate.
• He noted that core inflation — which strips out volatile food and energy prices — had already been climbing before the recent oil shock.
• Markets currently see less than a 50% chance of a July rate hike. A hotter-than-expected CPI could give the dollar another boost.
• A cooler reading, on the other hand, might finally give the euro something more exciting to do than trade sideways.