In the European session, we don't have anything on the agenda except a few ECB speakers. In the American session, all eyes will be on the US CPI report.

The Core CPI Y/Y is expected at 2.9% vs 2.8% prior, while the M/M figure is seen at 0.3% vs 0.2% prior. Inflation is expected to pick up a bit due to tariffs but the Fed has stated that it's willing to look through tariff related hikes if the uncertainty on the trade side eases.

The central bank expects to be able to cut in the latter part of this year but it's still unclear if it's going to be two cuts or just one. It will certainly be hard for them to deliver rate cuts if the economic data remains strong and the disinflationary trend stalls or even reverses.

The market sees 44 bps of easing by year end at the moment. Higher than expected figures will likely trigger a more hawkish repricing with just one rate cut becoming the base case. Conversely, lower than expected numbers should either keep the market priced for two cuts or add some probabilities for a third one.

Central bank speakers:

  • 09:30 GMT/05:30 ET - ECB's Lane (neutral - voter)
  • 11:00 GMT/07:00 ET - ECB's Stournaras (dove - voter)
  • 11:30 GMT/07:30 ET - ECB's Makhlouf (neutral - voter)
  • 14:30 GMT/10:30 ET - ECB's Makhlouf (neutral - voter)
Source: Forex Live