Euro rose in European trade near two-month highs against dollar amid a lack of data from Europe and ahead of some important US data today.

As of 08:59 GMT, EUR/USD rose 0.41% to 1.0340, with a session-high at 1.0341, after rising 0.84% yesterday, testing July 5 highs.

Earlier US data showed consumer prices rose less than expected, paving the way for a 50 basis points Fed rate hike at the next meeting, instead of 75 basis points. 

Recent data showed US consumers expect one-year inflation at 6.2%, down from 6.8%, while three-year inflation to be down to 3.2% from 3.6%, as gasoline prices decline.

Five-year inflation forecasts fell as well to 2.3% from 2.8%, and we'll get a better idea about current inflation rates in the US today.

A reversal in yields curves between two-year and five-year US treasury yields paves the way for serious depression in the US later this year. 

From the US, producer prices are expected up 0.2% in July, while core prices are expected up 0.5% m/m. 

US unemployment claims are expected up 4 thousand to 264 thousand last week, while continuing claims fell 9 thousand to 1.407 million.

US stock indices rose on Wednesday after the release of US inflation data. 

US consumer prices rose 8.5% y/y in July, less than 8.7% expected, and down from 9.1% in June. 

Core prices rose 5.9% y/y last month, and 0.3% m/m, while analysts expected a 0.2% rise. 

Gasoline prices rose 7.7% y/y, the highest since April 2020, after rising 11.2% in June, while food costs rose 10.9%.

Dow Jones rose 1.5% as of 14:31 GMT to 33,254, while S&P 500 rose 1.6% to 4,186, as NASDAQ climbed 2% to 12,740.

Gold futures tilted lower in European trace off late June highs, while the dollar index backed off July 28 highs, ahead of crucial US inflation data later today. 

As of 09:45 GMT, gold futures due in December fell 0.08% to $1,810 an ounce, while the dollar index slipped 0.20% to 106.13. 

From the US, consumer prices are expected up 8.7% last month, slowing down from 9.1% in the previous month.

US wholesale inventories are expected up 1.9% in June, while consumer credit is expected down to $172.5 billion.

Recent data showed US consumers expect one-year inflation at 6.2%, down from 6.8%, while three-year inflation to be down to 3.2% from 3.6%, as gasoline prices decline. 

Five-year inflation forecasts fell as well to 2.3% from 2.8%, and we'll get a better idea about current inflation rates in the US today. 

Several Fed officials expressed interest in hiking interest rates by yet another 75 basis points at the next few meetings to contain inflation.

Earlier Chinese data showed consumer prices rose 2.7% last month, up from 2.5% in June, while producer prices rose 4.2%.

From the US, consumer prices are expected up 8.7% last month, slowing down from 9.1% in the previous month.

China announced new military maneavours around Taiwan amid ongoing talks between US and Chinese military to discuss the Taiwan situation.

China also announced plans to stop cooperation with US on crime combat, triggering further tensions between both sides.

Euro tilted higher against dollar in European trade following earlier German data and ahead of major US inflation data that might influence the path of US monetary policy decisions. 

As of 09:22 GMT, EUR/USD rose 0.09% to 1.0222, with a session-high at 1.0226. 

From Germany, consumer prices rose 0.9% in July as expected m/m, while rising 7.5% y/y as expected as well. 

A recent study from IAB showed the German economy mighty lose over 260 billion euros of added value by 2030 due to the ongoing Ukrainian war and higher energy prices, in turn impacting the German labor market. 

The study expects German GDP to shrink by 1.7% next year, and for available jobs to tank by 240 thousand. 

Otherwise, German officials said the government wouldn't concede to Russia on the Nord Stream 2 pipeline that's closed currently, with the government admitting tough months ahead for the country due to lower natural gas supplies. 

Italy faces another crisis with Moody's credit agency cutting down Italy's sovereign rating to negative due to ongoing economic struggle and political instability.

The Italian financial ministry dismissed the decision by Moody's and asserted the Italian economy remains on its feet, and that all European economies face pressures.

The ministry announced reform plans for the financial and energy sectors, which will be implemented quickly following the upcoming vote.

From the US, consumer prices are expected up 8.7% last month, slowing down from 9.1% in the previous month.

US wholesale inventories are expected up 1.9% in June, while consumer credit is expected down to $172.5 billion.