EUR/USD looks cautious around 1.0960, focus remains on US inflation

• EUR/USD trades without clear direction near 1.0960.
• Final CPI in Germany rose 7.2 YoY, 0.4% MoM in April.
• US inflation figures will be in the limelight later in the session.

 The European currency keeps the prudent stance well in place and motivates EUR/USD to gyrate around the 1.0960 region on Wednesday.

EUR/USD now looks at US inflation

EUR/USD maintains the vacillating mood well south of the 1.1000 mark amidst the generalized cautiousness ahead of the release of key US inflation figures gauged by the CPI for the month of April.

In the meantime, spot remains under pressure against the backdrop of the increased buying interest in the Greenback and the resumption of the risk-off mood in the first half of the week.

In the docket, final inflation figures in Germany saw the CPI rise 7.2% in the year to April and 0.4% vs. the previous month. In addition, Industrial Production in Italy contracted 0.6% MoM in March and 3.2% from a year earlier.

Across the pond, all the attention will be on the publication of April’s CPI. Further data will see weekly Mortgage Application and the Monthly Budget Statement.

What to look for around EUR

EUR/USD faces renewed downside pressure in response to the resurgence of the risk aversion and the consequent investors’ move towards the greenback.

The movement of the euro's value is expected to closely mirror the behaviour of the US Dollar and will likely be impacted by any differences in approach between the Fed and the ECB with regards to their plans for adjusting interest rates.

Moving forward, hawkish ECB-speak continue to favour further rate hikes, although this view appears in contrast to some loss of momentum in economic fundamentals in the region.

Key events in the euro area this week: Germany Final Inflation Rate (Wednesday).

Eminent issues on the back boiler: Continuation (or not) of the ECB hiking cycle. Impact of the Russia-Ukraine war on the growth prospects and inflation outlook in the region. Risks of inflation becoming entrenched.

EUR/USD levels to watch

So far, the pair is losing 0.03% at 1.0957 and faces the next contention level at 1.0941 (monthly low May 2) followed by 1.0909 (weekly low April 17) and finally 1.0831 (monthly low April 10). On the flip side, the surpass of 1.1095 (2023 high April 26) would target 1.1100 (round level) en route to 1.1184 (weekly high March 21 2022).