EUR/USD holds above the 1.0980 mark, investors await US CPI

• EUR/USD holds positive ground near 1.0986, gaining 0.12% for the day.
• The announcement of Italy's bank tax, the fear of recession exert pressure on the Euro.
• Market anticipated that the Fed's stance would shift from additional rate hikes to holding rates steady.
• Market players will monitor the US Consumer Price Index (CPI) for July for fresh impetus.

The EUR/USD pair gains momentum and holds above 1.0980 heading into the early European session on Thursday. The major pair trades in positive territory for two consecutive days. EUR/USD currently trades around 1.0986, up 0.12% for the day.

In the Eurozone, Italy’s surprise tax on the windfall profits of banks and the possible recession in Germany exert pressure on the Euro against its rivals. Additionally, the odds of an interest rate pause by the ECB in its September meeting amid easing inflationary pressures and recession fear might cap the upside in the Euro and act as a headwind in the EUR/USD pair.

Earlier this week, the German Harmonized Index of Consumer Price (HICP) came in at 6.5%, matching the market consensus. The Eurozone Sentix Investor Confidence improved from -22.5 in July to -18.9 in August, versus the market consensus of -23.4. Later in the day, the European Central Bank will release the Economic Bulletin. This report could offer hints about the further monetary policy of the ECB for the entire year.

On the US dollar front, the recent commentary from Federal Reserve (Fed) speakers indicated that the Fed stance has shifted from additional rate hikes to holding rates steady. The Philadelphia Fed president, Patrick Harker, stated that the central bank can leave interest rates where they are. Meanwhile, Atlanta Fed president Raphael Bostic states that no further rate hikes are necessary. However, investors will take more cues from the US inflation figures. The weaker US inflation data might limit the Greenback and lift EUR/USD.

Looking ahead, the US Consumer Price Index (CPI) report will be released on Thursday. The data will have a significant impact on the Federal Reserve's (Fed) future rate hike path and help investors determine the direction of EUR/USD. The US inflation figure is expected to rise from 3% to 3.3%, and the core figure is expected to remain unchanged at 4.8%. Also, the US Producer Price Index for July will be released on Friday.