ECB July Hike Unlikely as Eurozone Inflation Cools

Inflation eased in France and Germany in June, pushing the European Central Bank closer to a pause in July, data showed Tuesday. A Reuters report early Tuesday, citing sources, said recent inflation developments have taken pressure off the ECB for a rate hike in July, though a case could still be made if the June numbers were "nasty."

ECB policymakers Philip Lane, Olaf Sleijpen, Joachim Nagel and Pierre Wunsch acknowledged that the surprising selloff in oil prices will have a positive impact on inflation. They refrained from giving a timeline for the next rate hike, pointing toward a pause in July and a potential rate hike in September if needed, according to remarks from the officials. Lane said lower oil prices will take time to feed through to the economy, as reported earlier.

The euro traded flat against the dollar on Tuesday, with EUR/USD hovering near 1.0900 as markets digested the dovish signals. For a closer look at the pair's dynamics, see the EUR/USD profile. The eurozone CPI report due Wednesday will be the next test for the common currency. A soft print would reinforce expectations that the ECB will hold rates steady in July, further weakening the case for a hawkish tilt.

In the American session, the US Job Openings and Labor Turnover Survey (JOLTS) is expected at 7.295 million, down from 7.618 million prior. Analysts said some of the recent boost in openings and hiring might have been tied to preparations for the 2026 FIFA World Cup. The labor market has improved considerably since 2025 and is no longer a source of concern for the Fed, with focus shifted to inflation. US Consumer Confidence is expected to improve to 94.4 from 93.1, supported by the end of the US-Iran war and lower energy prices.

Eurozone CPI is due Wednesday. The data will shape expectations for the ECB's July 27 decision.