On Tuesday, the EUR/USD pair finally broke down of its 3-day-old trading range and dropped to a near 2-week low level of 1.2254 amid resurgent US Dollar demand. The selling pressure abated during the Asian session on Wednesday, with the pair bouncing back to 1.2285-90 support turned resistance as the focus now shifts back to the economic fundamentals. Investors today will confront the preliminary release of latest Euro-zone consumer inflation figures, which is expected to show reviving inflationary pressure. Any positive surprise will be seen as bringing the ECB closer to policy normalization and provide some immediate respite to the shared currency. However, a weaker reading should reinforce just how far away the ECB is from achieving its inflation target and might continue exerting downward pressure on the major.
