Euro and Sterling Consolidate Before US CPI, UK GDP

Euro and sterling are holding tight ranges this week as traders pull back on big directional bets before a string of inflation and growth reports on both sides of the Atlantic.

EUR/USD is stuck between 1.1340 and 1.1430. The pair formed a bullish Piercing Line candlestick at the March low, a pattern traders often read as a reversal signal. A break above 1.1430 would need a catalyst from the data, several traders said. A hot US CPI print could push the euro back toward the bottom of the range.

GBP/USD bounced off the March low at 1.3160 and is now testing 1.3270 resistance. Sterling formed a similar Piercing Line. A close above 1.3270 would open a run to 1.3300-1.3310, traders said. A rejection would send cable back toward 1.3140-1.3160.

The dollar surged last week on hawkish Federal Reserve rhetoric and resilient US economic data. That move has stalled this week. Some traders said they are reducing dollar longs into the CPI release. The dollar story remains intact, they said. The risk-reward is too tight to add positions before the data.

Geopolitical risk has eased slightly. Reports that the US and Iran are close to a truce in the Strait of Hormuz have helped oil prices settle. Shipping through the strait has resumed. Iranian officials continue to make conflicting statements, and the risk of a fresh escalation is not zero. That leaves a floor under the dollar as a safe haven, even if the immediate pressure is off.

The next scheduled catalysts are the US CPI report on Wednesday and UK GDP on Thursday. Both will feed directly into rate expectations and, through them, into EUR/USD and GBP/USD. Until then, the ranges hold.