EUR/USD finds offers around 1.0200 as investors turn cautious ahead of US PCE Inflation

• EUR/USD has faced selling pressure while attempting a break above 1.0200 ahead of Eurozone GDP.
• A higher preliminary estimate for US PCE compels for more policy tightening by the Fed.
• Price pressures have not displayed exhaustion yet while retail demand has started declining.

The EUR/USD pair is facing barricades around the psychological resistance of 1.0200 in the Asian session. The asset has displayed exhaustion signals while attempting a break above 1.0200 and is likely to remain in a consolidation as investors are awaiting the release of the US Personal Consumption Expenditure (PCE) inflation, which is due on Friday.

As per the market consensus, the US PCE may elevate to 6.7% from the prior release of 6.3%. Federal Reserve (Fed)’s preferred inflation tool is compelling for adaptation of more policy tightening measures as inflation expectations have not displayed a principal exhaustion signal. Usually, price pressures initiate trimming down when households drop their usual demand due to higher prices intentionally and prices start returning to their optimal position.

According to the commentary from Fed chair Jerome Powell, a slump in retail demand is being observed, however, the inflation rate still needs to display a similar exhaustion pattern. The inflation rate is intended to scale lower in July and display the same in August as oil prices have not remained elevated.  

On the eurozone front, the market participants await the release of the Gross Domestic Product (GDP) numbers. The economic data is seen lower at 3.4% on an annual basis than 5.4% recorded earlier. An occurrence of the same will weaken the shared currency bulls. The trading bloc is already facing the heat of the energy crisis after Russia cut off the energy supply from its main pipeline and over that pressure from the GDP front will dampen the market sentiment.