EUR/USD drifts lower as German CPI holds at 2.0%, FOMC divided

EUR/USD declined 0.2% to 1.0810 following confirmation that German CPI remained at 2.0% year-over-year in June, matching expectations but failing to provide upward momentum. The euro faces headwinds as ECB rate cut expectations persist, with markets pricing a 65% probability of a 25bp reduction by September. Meanwhile, FOMC minutes revealed a split committee, with three members favoring immediate cuts while four preferred maintaining current rates at 5.25-5.50%. The dollar index strengthened to 105.60 as diverging central bank paths become clearer. Technical indicators show EUR/USD testing crucial 1.0800 support, with a break potentially opening the path to 1.0750. Resistance sits at 1.0840 (50-day MA). German economic resilience remains key for euro stability, though manufacturing PMI at 43.5 signals continued contraction. Traders should monitor upcoming ECB communications for policy guidance.