Major FX pairs range-bound as markets await crucial US CPI data

Foreign exchange markets are experiencing subdued volatility with major currency pairs trading in tight ranges ahead of today's pivotal US CPI release. EUR/USD hovers near 1.0950, USD/JPY consolidates around 142.50, and GBP/USD remains anchored at 1.3100 levels. The Consumer Price Index data, expected to show headline inflation at 2.6% YoY (down from 2.9%), will significantly influence Federal Reserve rate cut expectations for September. Core inflation is forecast to remain sticky at 3.2% YoY. Asian and European sessions saw minimal price action as traders reduced positions before the high-impact release. A softer-than-expected reading could weaken the dollar across the board and potentially put a 50bps Fed cut in play, while hot inflation might strengthen USD and reduce rate cut bets. Implied volatility indicators suggest potential for sharp moves post-release.