EUR/USD Remains Pressured Below 1.1000 as Eurozone Recession Concerns Persist

The EUR/USD pair continues to face challenges in gaining momentum and remains below the 1.1000 barrier on Tuesday.

Arslan Butt•Tuesday, August 8, 2023•1 min read

The EUR/USD pair continues to face challenges in gaining momentum and remains below the 1.1000 barrier on Tuesday. Investors are expressing concerns about the possibility of a recession in the Eurozone, especially in light of the upcoming release of US inflation data on Thursday.

As of now, the EUR/USD is trading around 1.0988, experiencing a 0.13% decline for the day.Despite a slight improvement in Eurozone Sentix Investor Confidence from -22.5 in July to -18.9 in August, which exceeded the market consensus of -23.4, Sentix Managing Director Patrick Hussy warned that the Eurozone economy is still in recession, dampening any optimism.Earlier this week, German Industrial Production figures for June disappointed, showing a decline of -1.5% MoM, worse than the anticipated -0.4% and the revised -0.1% from the previous report.

Furthermore, the European Central Bank’s (ECB) potential peak rate speculation was sparked by global rating agency Fitch Ratings, leading to an impact on the Euro’s performance against other currencies.On the US Dollar front, the Greenback has been bolstered by a hawkish comment from Atlanta Fed Governor Michelle Bowman, suggesting that additional rate hikes may be necessary to bring inflation back to target levels.

This outlook on further rate hikes throughout the year has the potential to strengthen the USD and limit upside movements in the EUR/USD pair.In the upcoming sessions, market players will closely monitor the German Harmonized Index of Consumer Prices (HICP) YoY for July, to be released on Tuesday.

The spotlight will then shift to the US Consumer Price Index (CPI) data on Thursday, which is expected to significantly impact the US Dollar and provide clearer direction for the EUR/USD pair.

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ABOUT THE AUTHOR See More

Arslan Butt

Lead Markets Analyst – Multi-Asset (FX, Commodities, Crypto)

Arslan Butt serves as the Lead Commodities and Indices Analyst, bringing a wealth of expertise to the field. With an MBA in Behavioral Finance and active progress towards a Ph.D., Arslan possesses a deep understanding of market dynamics. His professional journey includes a significant role as a senior analyst at a leading brokerage firm, complementing his extensive experience as a market analyst and day trader. Adept in educating others, Arslan has a commendable track record as an instructor and public speaker. His incisive analyses, particularly within the realms of cryptocurrency and forex markets, are showcased across esteemed financial publications such as ForexCrunch, InsideBitcoins, and EconomyWatch, solidifying his reputation in the financial community.