EUR/USD consolidates in low 1.0700s as traders eye this week’s ECB meeting/US CPI

• EUR/USD is trading in calm fashion in the low 1.0700s as traders eye this week’s ECB meeting and US CPI.
• A hawkish ECB/easing of US price pressures combo could see the pair push above 1.0800.

EUR/USD is trading just north of flat in the 1.0725 area, in quiet trade ahead of what will ultimately be a busy week for the pair. The European Central Bank (ECB) announces policy in June and is expected to solidify expectations for interest rates going positive by the end of Q3, with traders set to scrutinise President Christine Lagarde’s tone on the prospect of further tightening as markets guage the outlook for 2023. Meanwhile, US Consumer Price Inflation data for May is set for release on Friday and could impact expectations for Fed policy.

But the first three days of the week are set to be much quieter in terms of central bank events and economic data, meaning EUR/USD is likely to take its cue more from things like risk sentiment/geopolitical developments etc. That would suggest that the pair may well remain stuck within recent low-1.0600s to upper-1.0700s ranges, with the 50-Day Moving Average likely to act as a magnet, as has more or less been the case over the past few days.

Some strategists think that the case for a push above 1.0800 and to its highest levels since mid-April is on the cards for EUR/USD later this week/next week, should the ECB come across as hawkish and US inflation show signs of easing. On the latter, growing momentum behind the peak US inflation narrative and, thus, peak Fed hawkishness, has been a major driver of the recent rebound from last month’s lows under 1.0400.