New round of US inflation growth to push EURUSD down to 1.13 level

Since the beginning of June, the EURUSD currency pair has been trading below 1.145, unsuccessfully attempting to break above this level. Currently, the bulls lack the strength to advance the euro against the dollar. In this situation, there is an increasing likelihood that the quotes will move in the opposite direction and roll back to 1.13. Today's US statistics may further increase the odds of this outcome.

On Wednesday, US inflation data for May will be released. According to a Bloomberg survey, market participants expect the first acceleration in price growth since January. The headline inflation gauge could rise from 2.3% to 2.5%, and the core indicator is expected to increase from 2.8% to 2.9%. Donald Trump's tariffs should finally impact price dynamics as companies will eventually use up their stock of goods imported at the beginning of the year. Due to the imposed tariffs, new purchases will be significantly more expensive.

Against the backdrop of such inflation forecasts, traders are once again forced to adjust their views on the Fed's monetary policy. Before Friday's labor market report, traders expected three to four cuts in the US regulator's key rate this year. Now the estimate has shifted to a range of two to three cuts. Citigroup analysts in particular have revised their projections. They believe the Fed will maintain a wait-and-see approach until fall.

At the same time, the ECB may not stop adjusting the deposit rate at 2%. Barclays experts predict two more steps to ease monetary policy to be implemented in September and December. Although ECB President Christine Lagarde has announced the end of the rate cut cycle, economic data may force officials to further reduce borrowing costs. This primarily refers to inflation, which fell below the ECB's target level of 2% in May.

The RSI and Stochastic indicators on the EURUSD daily chart are moving downward, confirming the sell signal. The nearest correction target is 1.13.

Consider the following trading strategy:

Sell EURUSD in the range of 1.14–1.145. Take profit — 1.13. Stop loss — 1.15.