EUR/USD in focus as Eurozone August CPI seen at 3.3%, core at 2.5%

EUR/USD is trading cautiously ahead of the Eurozone flash HICP release for August, with headline annual inflation expected to accelerate to 3.3% from the prior reading, while core inflation is forecast at 2.5%. The core print remains the dominant variable for traders, as the ECB has repeatedly stressed that underlying price pressures, particularly in services, will determine the pace of any further policy adjustment. A core reading above 2.5% would reinforce expectations that the ECB stays on hold for longer, offering support to the single currency, while a downside surprise would revive easing bets and expose the euro to renewed selling. Country-level prints from Germany, France, Italy and Spain feed into the aggregate, so early releases often set the intraday tone before the bloc-wide figure lands. Traders should expect a volatility spike around the release, with EUR/USD sensitive to any deviation of one tenth or more from consensus. EUR/GBP and EUR/JPY are also likely to see repricing, particularly if the services component surprises on either side of expectations.