EUR/USD under pressure as German CPI data looms, ECB holds cautious stance

EUR/USD remains subdued near 1.0820 ahead of crucial German state inflation data, with the pair showing limited movement in early European trading. July's German national CPI held steady at 2.0% year-over-year, while core inflation persisted at 2.7%, significantly above the ECB's comfort zone. The stubborn core inflation readings continue to support the ECB's hawkish stance, with market participants now pricing out any rate cuts through Q3 2025. Despite resilient economic conditions across the eurozone, the central bank maintains its guard against persistent price pressures. Technical indicators suggest EUR/USD faces immediate resistance at 1.0850, with support established at 1.0800. Today's German state CPI releases could provide fresh directional momentum, particularly if readings deviate from expectations. Traders should monitor whether inflation shows signs of moderation, which could weaken the euro, or remains elevated, potentially supporting further ECB tightening bias.