EUR/USD recovers toward 1.1090 after US inflation data

• Annual core CPI in US remained steady at 2.3% in November.
• US Dollar Index registers small daily losses below 97.50.
• Markets' attention shifts to FOMC's monetary policy announcements. 

The EUR/USD pair rebounded modestly in the last hour as the initial market reaction to the inflation data from the United States caused the greenback to weaken against its rivals. As of writing, the pair was virtually unchanged on a daily basis near the 1.1090 mark.

The data published by the United States (US) Bureau of Labor Statistics (BLS) on Wednesday showed that the core Consumer Price Index (CPI) in the US stayed unchanged at 2.3% on a yearly basis in November. Although this reading came in line with the market expectation, the initial reaction caused the US Dollar Index to fall to a fresh session low below the 97.50 mark.

Central bank meetings remain in limelight

Nevertheless, the pair is unlikely to gather further momentum in the next hours as investors are unlikely to make large bets ahead of the Federal Open Market Committee's (FOMC) monetary policy announcements. Although investors don't see the Fed cutting its policy rate one more time, the updated economic projections will provide fresh clues regarding the rate outlook in 2020. 

Once the FOMC event is over, investors' attention will shift to the European Central Bank's (ECB) meeting and President Lagarde's first press conference on Thursday.

Previewing the ECB event, “We look for the EUR to react only mildly as policy continuity should be the main takeaway," saşd TD Securities analysts. "Lagarde's style and tone is a wild card. Barring an early misstep there, the slight downgrades we see to growth may be offset upgrades to next year's inflation forecast. This should keep EURUSD confined to familiar ranges overall.”

Technical levels to watch for