• EUR/USD lacks firm direction as traders await Eurozone inflation data before placing fresh bets. 
• Fed Chair Jerome Powell’s hawkish remarks on Monday underpins the USD and caps the major.
• Bets for more rate cuts by the ECB contribute to keeping a lid on the pair ahead of the key data.

The EUR/USD pair struggles to gain any meaningful traction following the previous day's pullback from the vicinity of the 14-month peak – levels just above the 1.1200 mark and oscillates in a narrow band during the Asian session on Tuesday. Spot prices currently trade around the 1.1135-1.1140 area, nearly unchanged for the day as traders keenly await the release of the Eurozone inflation data before placing directional bets.

The flash version is expected to show that the Eurozone Consumer Price Index (CPI) probably fell below the European Central Bank's (ECB) 2% target in September. Against the backdrop of a fall in the German CPI to the lowest level since February 2021, a softer Eurozone CPI print will reaffirm bets for a 25 bps rate cut at the next ECB policy meeting in October. Conversely, the reaction to a higher reading is likely to remain limited amid a modest US Dollar (USD) strength, suggesting that the path of least resistance for the EUR/USD pair is to the upside. 

The Federal Reserve (Fed) Chair Jerome Powell adopted a more hawkish tone on Monday and said that he sees only two more 25 basis point interest rate cuts this year as a baseline if the economy performs as expected. Investors were quick to react and pared bets for a more aggressive policy easing by the US central bank. This, along with the risk of a further escalation of geopolitical tensions in the Middle East and a broader conflict in the region, assists the safe-haven Greenback to build on the previous day's goodish rebound from its lowest level since July 2023.