EUR/USD fluctuates within range with all eyes on US CPI figures

EUR/USD consolidates around 1.1650 on Tuesday after rejection at the 1.1700 area the previous day.
Hawkish comments by Fed’s Williams provided some support to the US Dollar on Monday.
The market is bracing for a strong US CPI reading later on Tuesday.

EUR/USD is trading at 1.1660 at the time of writing, after moving back and forth between 1.1650 and 1.1675 during the Asian ans European Markets on Monday. The pair eased from weekly highs near 1.1700 on Monday after New York Federal Reserve’s (Fed) President John Williams conveyed an optimistic view on the US economic outlook, and curbed expectations of any immediate rate cut.

Previously, investors had sold the US Dollar across the board, as a report by the New York Times affirming that the US Government was initiating a criminal investigation against the Fed Chairman, Jerome Powell, boosted concerns about the independence of the US central bank.

The US government’s action is the last episode of a long-lasting conflict between US President Donald Trump and Jerome Powell, which raises questions about the central bank’s ability to set its monetary policy based solely on its dual mandate of maximum employment and stable prices. The Presidents of the world’s major central banks issued an unprecedented statement on Tuesday in solidarity with Chairman Powell.

Macroeconomic data is expected to return to the focus on Tuesday, as the US Bureau of Labour Statistics (BLS) releases the December US Consumer Price Index (CPI) report. Price pressures are expected to have remained well above the Fed’s 2% target, with core inflation ticking up. Barring surprises, these figures are likely to endorse the positions of the Fed’s hawkish party.