Focuses on the EU economy, Fed minutes, and oil inventories

Ahead of Wednesday's release of key Eurozone growth figures, European stock markets are expected to open higher. The latest minutes of the Federal Reserve meeting will be released later in the session, which will be closely watched by investors.

It is clear that the gas crisis and what it means for the eurozone's growth prospects this winter have taken a toll on the single currency. Current EUR/USD trading ranges between 1.00 and 1.035. If there is a trigger that catapults the pair out of the range, this breakout is most likely to occur on the downside of the range.

EU economic growth

As we approach the final reading of Eurozone Q2 GDP, preliminary data have shown faster than expected growth. However, this will likely be the economy's last big celebration as energy prices continue to rise and consumers are forced to make hard decisions.

UK inflation record

Earlier in the day, UK consumer prices hit a two-digit record, rising by 10.1% in the year to July, exceeding expectations of 9.8% and reaching a new 42-year high. 

Inflation is expected to reach 13.3% in October, which is the peak forecast by the Bank of England. However, it is a warning that the country faces a deep and prolonged recession if this rate continues.

US dollar index

In other news, the dollar index, a measure of the greenback's strength against six main peers, fell by a fraction to 106.3 after ending the previous day unchanged.

Despite a cooling-than-expected reading of US inflation last week, the index is still well below the 109.29 level reached in late July, which was the highest point since mid-July.

It seems that over the course of the last few days and weeks, the Fed has been having some trouble getting the market to accept that they (the Fed) would be cutting rates in 2023, despite market expectations to the contrary.

Therefore, if the minutes include things that push back against that notion and that lead to a repricing of the US rate curve for 2023, that could be a catalyst for reversing the decline in the US dollar that we have been experiencing over the last month or so.

Oil

The price of crude oil rose on Wednesday, rebounding from six-month lows after a bigger-than-expected drop in US crude inventories reduced concerns over the waning demand in the world's largest crude consumer.

According to data from the American Petroleum Institute, crude stocks dropped by about 448,000 barrels during the week ended Aug. 12. Gasoline inventories fell by about 4.5 million barrels.

Investors are now waiting for official data from the Energy Information Administration, which will be released later in the session.

A proposal from the European Union, which could potentially remove sanctions on Iranian oil exports, will also be of interest in the discussions to revive the 2015 Iran nuclear deal.