EUR/USD capped at 1.0850 as traders await ECB inflation data

EUR/USD struggled to maintain upward momentum, trading at 1.0842 after briefly testing the 1.0850 resistance level during Wednesday's European session. The pair gained a modest 0.15% (16 pips) but faced selling pressure as traders remained cautious ahead of Thursday's crucial Eurozone inflation report, expected to show headline CPI at 2.2% year-over-year. Market positioning reflects uncertainty about the European Central Bank's next move, with futures pricing in a 65% probability of a September rate cut. The German DAX index's 0.3% decline added to euro headwinds, while the Dollar Index held steady at 101.92. Technical analysis shows immediate resistance at 1.0850-1.0860, coinciding with the 50-day moving average, while support sits at 1.0820. A decisive break above 1.0860 could open the path to 1.0900, but traders appear reluctant to commit before inflation data clarifies the ECB's policy trajectory.