The EUR/USD pair traded with mild gains around 1.1620 during the early Asian session on Tuesday, maintaining a constructive bias above key technical levels such as the 20-period Bollinger middle band at 1.1600 and the 100-day simple moving average near 1.1570. Momentum indicators, including the Relative Strength Index (14) at 57, suggest persistent buying interest without reaching overbought conditions, while immediate resistance is seen at the upper Bollinger band near 1.1713 and support at 1.1600 and 1.1570, with deeper demand at 1.1488 [1].
German inflation data released by Destatis showed the Consumer Price Index (CPI) rose to 2.9% year-on-year in August, up from 2.8% in July, marking the third consecutive monthly increase and matching market consensus. On a monthly basis, CPI rose 0.2% in August, which was softer than the 0.3% expected and lower than the previous 0.8% reading [1].
Market participants are awaiting the preliminary reading of the Eurozone August Harmonized Index of Consumer Prices (HICP), due later on Tuesday, as it could provide further cues for EUR/USD direction. European Central Bank (ECB) policymakers have already lifted borrowing costs once and are likely to hike again at the upcoming policy meeting on September 10, with traders betting on further monetary tightening next year [1].
Across the Atlantic, hawkish remarks from Federal Reserve Chair Kevin Warsh at Jackson Hole have increased bets on a September rate hike, as Warsh stated the Fed will "have work to do" if policymakers are not confident that underlying inflation is returning to its 2% target. Strategists at Scotiabank noted that Warsh used his Jackson Hole appearance to clarify his policy stance and address concerns over communication following the July FOMC, restoring a clearer policy signal ahead of the September meeting [1].
CONCLUSION
The euro remains resilient above 1.1600 amid rising German inflation and expectations of further ECB rate hikes, while hawkish signals from the Fed are supporting the US dollar and capping EUR/USD upside. Traders are closely watching upcoming Eurozone inflation data and central bank meetings for further direction. Overall, market sentiment is cautiously constructive for the euro, but upside may be limited by US monetary policy developments.