EUR/USD drifts lower ahead ECB decision, US CPI data

EUR/USD is pulling back to levels near 1.1700 after rejection at 1.1750.
The pair is likely to remain in range ahead of the ECB’s monetary policy decision and US CPI data.
The ECB is expected to leave its benchmark interest rate steady at 2%.

EUR/USD has been rejected at 1.1750 and trades lower for the third consecutive day, changing hands at 1.1715 at the time of writing, but still within the weekly range, above 1.1700. The pair is suffering as the US Dollar accelerates its recovery, with investors reluctant to take excessive risks ahead of key interest rate decisions and the release of US consumer inflation data.

The highlight of the day will be the outcome of the European Central Bank’s (ECB) monetary policy decision. The bank is widely expected to leave its benchmark Rate On the Deposit Facility unchanged at 2% and signal steady monetary policy for the foreseeable future. Any nod to a rate hike on the horizon would be considered a hawkish sign and boost the Euro (EUR) higher.

In the US, investors will be attentive to the release of November’s Consumer Price Index (CPI) for further insight about the US Federal Reserve’s (Fed) monetary policy plans. Labour data released earlier in the week has been fairly soft, and the risk now is on a moderate inflation reading, which would pave the path for further monetary easing and increase bearish pressure on the US Dollar (USD)