• EUR/USD is aiming to sift into the prior balanced market profile in a 1.0123-1.200 range.
• Declining gasoline prices and Fed’s soaring interest rates have trimmed consensus for the US inflation rate.
• ECB’s rate hike announcement has trimmed Fed-ECB policy divergence.

The EUR/USD pair has sensed selling interest right after opening around Friday’s high near 1.0100. The asset is expected to turn sideways as it is auctioning around a prior balanced balance profile placed in a range of 1.0123-1.200 and requires a substantial amount of strength to break the same. On a broader note, the major has shown some signs of bullish reversal and will maintain a bullish bias.

This week, the US Consumer Price Index (CPI) data will be of utmost importance. As gasoline prices have fallen dramatically in the US region and the soaring interest rates by the Federal Reserve (Fed) have squeezed liquidity, consensus for the US inflation is hinting at a decent decline ahead. The US inflation is expected to land at 8.1%, lower than the prior release of 8.5% on an annual basis. While the core CPI figure that doesn’t inculcate food and energy prices is seen higher by 10 basis points (bps) at 6%.

It seems that the prolonged energy-push inflation is losing momentum and durable goods inflation is getting more traction. Despite, a decline in US inflation consensus, the odds of a rate hike by the Fed are expected to remain stable as inflationary pressures are still widely deviated from the desired inflation rate of 2%.

Fed Governor Christopher Waller said on Friday that it was too soon to say whether inflation was moving meaningfully and persistently downward, as reported by Reuters. Fed policymaker added further that the tight labor market has faded signs of recession ahead and the extent of the rate hike will be more data-driven.

On the eurozone front, the rate hike announcement by the European Central Bank (ECB) infused fresh blood into the shared currency bulls. ECB President Christine Lagarde announced a 75 basis point (bps) rate hike to contain the inflation chaos. Also, a bumper rate hike announcement has trimmed the Fed-ECB policy divergence.

• GBP/USD pops higher in the open ahead of a key week for the greenback. 
• The US CPI will be a key event for the pair. 

After rallying to a high of 1.1648 on Friday, GBP/USD has gapped from a close of 1.1585 to 1.1640 so far as the US dollar comes under pressure from the off. 

The greenback fell away from a near 20-year high recently and dropped as low as 108.35 and was last down 0.6% at 108.93 as measured by the DXY index. Nevertheless, US rate futures are pricing in an 87% chance of the Fed hiking by 75 bps hike this month. The fresh US Consumer Price data this week is likely to be closely watched which could determine the size of the Federal Reserve's rate hike at this month's policy meeting.

''Core prices likely stayed firm in August, with the series registering another 0.3% MoM gain. Shelter inflation likely maintained strong momentum, though we look for used vehicle prices to retreat again. Importantly, gas prices likely brought additional notable relief for the headline series, declining a sharp 11% MoM. Our MoM forecasts imply 8.0%/6.0% YoY for total/core prices,'' analysts at TD Securities explained. 

Meanwhile, after a modest dip the previous day following the death of Queen Elizabeth, the pound is firm on the sentiment over a hawkish Bank of England. The central bank said on Friday that it would delay its next monetary policy meeting by one week due to the period of royal mourning. 

''We expect this to move the Bank of England from a state of front-loaded 75 bps rate rises to one in which we will see a more gradual but also a more sustained path of rate increases,'' analysts at Rabobank said. 

''We still favour a 50 bps increase in Bank rate to 2.25% next week; a 50 bps hike in November looks now likely too. The risks remain skewed to the upside.''

• AUD/USD bears are lurking for the open.
• Bulls need to stay in control above 0.6820.

The week ahead will be key for this pair considering the Aussie Labour market and the US Consumer Price Index with the Federal Reserve fast approaching. Meanwhile, for the open, the price is trapped between 4-hour support and resistance. The following illustrates the importance of 0.6820 on the downside and 0.6880 on the upside with prospects for 0.6950 for the week ahead.

AUD/USD prior analysis

It was stated that the W-formation's support was sturdy and a break of the trendline would open the risk of a firmer rally and throw the daily chart's downside thesis into the wind. 

AUD/USD live market

The price rallied and broke through resistance which now leaves the upside bias intact for the day ahead. The bulls will need to stay committed above 0.6815/20 for the 38.2% Fibonacci retracement to serve as a demand area. On the other hand, if the bulls give way there, then the area of last defence could come in at the neckline of the daily W-formation as follows: