The EUR/USD pair has stabilized above 1.1595 on Tuesday, posting slight gains in early European trading after last week’s pullback from the 1.1700 level. Support for the euro is being aided by cautious optimism over potential Ukraine peace talks, while the US dollar remains flat ahead of key inflation data.
According to The Wall Street Journal, Russian President Vladimir Putin has proposed a ceasefire in exchange for territorial concessions in Eastern Ukraine. Although Ukrainian President Volodymyr Zelenskyy has rejected the offer, markets are still hopeful for progress, with Putin scheduled to meet US President Donald Trump in Alaska on Friday.
The main focus today will be the US Consumer Price Index (CPI) for July. Markets expect a rise to 2.8% year-on-year, up from 2.7% in June, with core CPI projected at 3% from 2.9% previously. A stronger reading could dampen expectations for a September Federal Reserve rate cut, while a softer figure would reinforce them. Fed officials Thomas Barkin and Jeffrey Schmid, both considered hawkish, are due to speak after the data release.
On the trade front, the US and China have extended their tariff truce for another 90 days, preventing the activation of steep reciprocal tariffs. While widely expected, the move has slightly pressured the safe-haven US dollar.
In the Eurozone, the ZEW Economic Sentiment Survey is anticipated to show weaker sentiment for both the region and Germany. The key regional event this week will be Thursday’s preliminary Q2 GDP report.
Technical Outlook
EUR/USD maintains a short-term bullish bias, though momentum has softened since last week’s rejection at 1.1700. The 4-hour RSI has dipped below 50, and the MACD has turned negative.
The 1.1595 level, a previous resistance, is now acting as immediate support. A drop below this could open the way to 1.1530 (August 5 low) and 1.1460 (July 31 high). On the upside, reclaiming 1.1630 would be needed to refocus on 1.1700, with further resistance near 1.1735 at the descending trendline and 78.6% Fibonacci retracement of the late-July decline.
