Ella 
Entering the European session on Friday, EUR/USD stabilized above the 1.0980 mark. The pair rose for a third straight session after retracing from a one-week high of 1.1065 following the U.S. inflation data. Market participants await the release of U.S. PPI data during the North American session.
The European Central Bank’s monthly economic bulletin on Thursday showed that the inflation rate in the euro zone will remain high for a long time, and the outlook for economic growth and inflation remains uncertain. According to a Reuters poll, the 2% inflation target may not be reached until 2025, and more than 90% of economists polled do not expect a rate cut until the second quarter of 2024.
In terms of the US dollar, the annual rate of CPI in the United States rose from 3% to 3.2% in July, which was lower than market expectations of 3.3%. Core CPI fell to 4.7% from 4.8%. In addition, the number of initial jobless claims rose to 248,000, 230,000 expected. The dollar reversed course after the data, dragging the euro lower on Thursday.
Beyond that, Fed San Francisco chairwoman Mary C. Daly said on Thursday that there is still a lot of information to evaluate and that it is too early to predict whether additional rate hikes or a long-term stance will be needed. This in turn limits the upside for the euro and is bearish for the EUR/USD pair.
Looking ahead, all eyes will be on the highly anticipated US inflation data. The U.S. producer price index (PPI) is due later in the day. The year-on-year increase in the figure is expected to rise to 0.7% from 0.1%. In addition, the University of Michigan (UoM) Consumer Sentiment Survey will also be released on Friday. Traders expected the data could convince the Federal Reserve (Fed) that the current economic situation is under control and no further rate hikes are warranted. This data is crucial in determining a clear direction for the EUR/USD currency pair.
