- EUR/USD keeps the familiar range around 1.1070.
- German Flash CPI came in on the soft side.
- US advanced Q2 GDP seen at 2.0%, matching estimates.
The mood around the shared currency remains tilted to the downside so far this week, with EUR/USD now meandering the lower end of the range aroud 1.1070.
EUR/USD stays weak after data
The pair has been trading in the red figures since Monday, coming down under strong and renewed selling pressure after multi-day highs in the 1.1160/65 band.
In fact, both the US and China has shown some confidence that trade talks could resume anytime soon and probably before tariffs kicks in on September 1. This headline lifted US yields and lent support to the buck at the same time, keeping spot well under pressure.
Additionally, advanced German inflation figures published today showed the CPI is expected to contract 0.2% MoM in August and to raise 1.4% from a year earlier, both prints coming in short of expectations and putting extra pressure to EUR.
Across the ocean, another revision of GDP showed the economy is projected to expand at an annualized 2.0% during the April-June period, in line with consensus.
What to look for around EUR
Spot remains on the defensive amidst the better tone in the buck and somewhat renewed optimism on the US-China trade front. Today’s poor results from German advanced CPI reinforce the case for extra monetary stimulus by the ECB likely to be delivered at the September meeting. This view is also expected to keep occasional bullish attempts well contained for the time being. On the political front, positive developments from Italy have been utterly ignored by investors so far.
EUR/USD levels to watch
At the moment, the pair is losing 0.08% at 1.1068 and faces immediate contention at 1.1051 (low Aug.23) ahead of 1.1026 (2019 low Aug.1) and finally 1.0839 (monthly low May 11 2017). On the upside, a breakout of 1.1128 (21-day SMA) would target 1.1186 (61.8% Fibo of the 2017-2018 up move) en route to 1.1199 (55-day SMA).
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