U.S. CPI Data In Focus

The U.S. dollar was back around the highest level since 2020 while the euro fell to 1.0072, a fresh record-low against the greenback. Reasons for the negative market sentiment are more Covid curbs in China, rising price pressures and worries about the global economic outlook.

U.S. jobs data beat expectations last Friday which is why the market now sees a green light for the Federal Reserve to hike another 75bp on July 27. With hiring conditions remaining solid, the Fed may retain a hawkish stance while the market keeps betting on super-sized rate hikes at upcoming FOMC meetings.

This week’s focus will be on the U.S. inflation reading which is expected to get closer to 9 percent. U.S. CPI data is due on Wednesday.

EUR/USD: The euro was able to stabilize above 1.01 after its dip to 1.0072. The pair is in oversold territory, so some short-term pullback would be reasonable. Above 1.02, we see a lower resistance coming in at 1.03 from where fresh selling pressure could increase. However, if the euro falls again below 1.01, the focus turns swiftly to parity.

GBP/USD: The general bearish trend remains strong and traders eye a break below 1.1850 with a next lower target seen at 1.1750. On the upside, a current resistance is seen t 1.2120.

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