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EURUSD is gaining traction following a quiet European session. Softer New York Fed consumer inflation expectations of yesterday, falling energy prices (oil in particular) and a broader weaker dollar are improving the risk appetite for the euro. Nonetheless big buyers might remain on the sidelines until the release of Tomorrow's US CPI print. 

The BoE is expected to vote for a 50 basis points increase in just 3 hours (1pm local time), its largest increase for more than 25 years. The decision comes in response to the sticky high inflation rate in the UK. Traders will be trying to read through the lines for clues on future guidance. A more committed hawkish BoE could provide a strong momentum to the GBP, which has depreciated nearly 10% against the USD since the start of the year. 

The franc is on its way to a strong month after the dollar retreated slightly from its highs. We began highlighting the USDCHF two weeks ago when the pair was showing signs of reversal. Now that it has gained from 0.9850 to around 0.96, what could come next? The Swiss National Bank (SNB) could be looking to make up for lost time and it is reportedly considering a 50bp move in September. SNB officials are proving to show an increasing desire to hike, given the inflationary pressure in the region. The next level in the cards could be 0.95 for USDCHF pair.

Traders in quiet pre-FOMC meeting may like the bullish hourly flag that’s formed with the help of large 1.0250 option strikes rolling off into this Friday.
Weak IFO data and Russia curbing gas flows to Eurozone are negative for the currency. Yet, buy stops to exit from said shorts are building above the 1.0278, July 21 high. If triggered, it could create a significant upside move.

The euro surged against the dollar 0.9% to 1.0235, even before the inflation data came out. Eurozone June CPI gained 0.8% month-over-month and 8.6% year-over-year, adding pressure to the ECB to act. The Core CPI (without food and energy) increased 3.7% yoy. The European Central Bank is expected to lift interest rates by 0.25% on Thursday and provide investors with clues on the pace at which it plans to withdraw stimulus. On a technical picture, the EURUSD is showing encouraging signs, and the next resistance to break-through is at roughly 1.04.