EUR/USD halted in anticipation of the July inflation report in the US. Although the rate at which the index is growing is expected to slow down, the final figure will remain high, which will harm risky assets. Because of this, some Fed representatives recently gave statements that there will be nothing to be worried about if the committee acts more aggressively in terms of raising interest rates.

Fed Governor Michelle Bowman, for instance, said she supports the recent rate hikes because she believes it needs to be done until inflation is quelled. This means that the 0.75-percentage-point rise in borrowing rates during the last two monetary policy meetings, albeit were the biggest since 1994, were appropriate as inflation has reached its highest level in more than 40 years. In addition to the rate hike, the Federal Open Market Committee said a permanent increase will be appropriate if inflation does not stop growing.

Several regional Fed presidents also said they expect rates to spiral higher until inflation falls. The report for July is due out today, where monthly inflation is expected to slow sharply to 0.2%, while the annual growth rate will be 8.7%.

After Friday's payroll report, which showed an increase of 528,000 in July and wage growth of 5.2% year-on-year, markets revised their forecasts for interest rates. They said there may be another 0.75% rate increase at the FOMC meeting in September.

Bowman said she will be closely monitoring upcoming inflation data to determine exactly how much rates should be raised. According to her, the latest data cast doubt on hopes that inflation has reached its peak. She also noted that there is a significant risk of high inflation next year on essentials, including food, housing, fuel and vehicles.

In terms of the forex market, EUR/USD rate also depends on the upcoming US inflation data. A lot depends on the nearest resistance level 1.0240 because going beyond it will give confidence to buyers of risky assets. It could open the chance for the pair to rise to 1.0270, then to 1.0330. But if selling pressure arises near 1.0200, the pair will fall to 1.0170, then to 1.0140 and 1.0100.

In GBP/USD, a lot depends on 1.2060 because staying above it will prompt a rise to 1.2100. Then, further buying pressure will push the pair to 1.2135, 1.2170 and 1.2210. If 1.2060 is broken, the pair will fall to 1.2060, then decline to 1.2005, 1.1960 and 1.1930.