EUR/USD exchanges gains with losses in the 1.0210 region. Final Germany CPI rose 7.5% YoY in the month of July. US CPI is expected to show a slowdown in the inflation in July.

The index trade within a narrow range near 106.30. Price action in US yields also remain apathetic near Tuesday’s close. All the attention will be on the release of US inflation figures later in the day.

Silver witnesses some selling for the second straight day and moves away from a multi-week high. The technical set-up still seems tilted in favour of bulls and supports prospects for additional gains. A sustained break below the $19.20 region is needed to negate the near-term constructive outlook.

It has been a trendless week for the dollar so far. Today sees the biggest data event risk of the week – and probably of the month, The Consumer Price Index (CPI) in the United States. Economists at ING expect the report to keep the dollar well supported.

UK equities have held up well. The FTSE 100 index is up 1.5% year to date, outperforming other major markets. Economists at UBS see reasons why UK equities can continue to do well.

July inflation will be published today in the Czech Republic. The EUR/CZK pair trades around the 24.50 level and economists at ING expect the market to simmer an attack to the 24.60-70 zone.

“EUR/USD continues to languish near the lows and there does not seem a compelling case to buy it. Medium valuation considerations do not show it as particularly undervalued. And the larger geopolitical event risks leave Europe more exposed than North America.”

“Declining levels of implied volatility suggest investors may be in no mood to chase EUR/USD out of a 1.0100-1.0300 range near-term.”

 

EUR/USD extends its sideways grind near 1.0200 into the third straight day on Wednesday. Looking ahead, tighter monetary policy and the lingering global energy crunch render economists at Danske Bank confident in their call for EUR/USD to drop back below parity. 

Here is what you need to know on Wednesday, August 10:

Major currency pairs are struggling to make a decisive move in either direction as market participants remain on the sidelines while waiting for the US Bureau of Labor Statistics to release the July inflation report. The market mood remains cautious early Wednesday with the US stock index futures trading in negative territory and the benchmark 10-year US Treasury bond yield holding steady at around 2.8%. The Consumer Price Index (CPI) in the US is expected to decline to 8.7% on a yearly basis in July from 9.1% in June and the annual Core CPI is forecast to edge higher to 6.1% from 5.9%: 

US July CPI Preview: What is the base effect and why it matters.

After having closed the previous day flat, the US Dollar Index continues to move up and down in a tight range above 106.00 in the European morning. St. Louis Fed...

USD/JPY lacks any firm directional bias and remains confined in a narrow trading range. Traders prefer to move on the sidelines ahead of the crucial US consumer inflation data. The Fed-BoJ policy divergence, meanwhile, continues to act as a tailwind for the major.

Gold price is easing from near monthly highs ahead of US inflation. US CPI will shape the Fed rate hike policy and market sentiment. XAU/USD sees healthy barriers on both sides amid a sense of caution.

CME Group’s flash data for natural gas futures markets noted open interest dropped for the fourth consecutive session on Tuesday, this time by more than 2K contracts. In the same line, volume went down by around 77.8K contracts after two daily builds in a row.

Gold price tested the $1,800 mark for the first time in over a month on Tuesday. Economists at Credit expect the yellow metal to eye the 200-day moving average (DMA) on a sustained break above 55-DMA at $1,792. 

“Whilst we see scope for the pause to continue for now, we maintain our core bearish outlook from a technical perspective and look for strength to eventually fade for a turn back lower to the YTD low at 0.6680, with a sustained close below here needed to prompt a deeper setback to the 61.8% retracement of the 2020/21 uptrend at 0.6461.”

“Whilst above 0.7069 would warn of a stronger recovery, only above the falling 200-DMA at 0.7155 would lead us to reevaluate our negative AUD/USD view.”

 

China’s inflation report for July was acceptable and showed few signs for concern. USD/CNY is flat on the data. Economists at Commerzbank expect the USD/CNY pair to move within the 6.70-6.80 range near-term.

“As we still believe that the fundamental drivers for a lower EUR/CHF are in place, we revise our target downward again to 0.9400.”

“As a level where we would consider our view incorrect, we suggest a daily NY close above 1.0060, down from 1.0525 previously.”

 

The price action in the Brazilian real in Q3 so far has been in line with a cautiously bullish view. However, economists at Commerzbank expect the USD/BRL pair to turn back higher. 

“With a number of key supports, which include the recent price low, a retracement support, the breakout point from April, and the 200-day average, all coinciding at 0.9469/9426, we look for the weakness to be held here and for an eventual upside towards the middle of the range to unfold.”

“Above 0.9668 is needed to shift the risk back higher within the range. In contrast, a sustained move below 0.9426 would negate the range and support a deeper decline to the potential uptrend from 2021 at 0.9277.”

 

Advancing Treasury yields are indicating that the US CPI is likely to surprise on the upside. The upbeat US NFP has already bolstered the odds of status quo maintenance by the US Inflation. Fed’s Bullard sees interest rates at 4% by the end of CY2022.

The Norwegian krone has been able to retrace the losses seen in early summer and is now trading under the 10 level. Economists at Commerzbank expect the EUR/NOK to move downward if the Norges Bank hikes rates substantially next week.

Considering preliminary readings from CME Group for crude oil futures markets, traders increased their open interest positions by around 2.3K contracts on Tuesday after three consecutive daily retracements. Volume followed suit and rose by around 92.6K contracts, offsetting the previous daily drop.

USD/JPY is seeing its consolidation phase as looked for following strength to just shy of the psychological 140.00 barrier. In the view of analysts at Credit Suisse, weakness stays seen as a correction in the long-term uptrend, although this may persist for some time yet.

EUR/USD is holding steady above 1.0200, extending consolidation in early Europe. Germany confirms final HICP at 8.5% YoY in July. The US dollar struggles to find demand amid sluggish Treasury yields ahead of the all-important inflation data. 

 

Brent Crude Oil closed below its 200-day average last week but still holds the 38.2% retracement of the entire 2020/2022 uptrend at $92.09. A move below here is seen as needed to reinforce thoughts of an important turn lower, strategists at Credit Suisse report.

Open interest in gold futures markets extended the erratic performance and shrank by around 1.9K contracts on Tuesday according to advanced prints from CME Group. Volume reversed the previous daily drop and went up by around 19.5K contracts.