EUR/USD Faces Downward Pressure Amid Positive US Data and Fed’s Inflation Concerns
The EUR/USD currency pair continues its downward momentum, marking its fifth straight day of losses in the Asian trading session on Thursday, currently trading at approximately 1.0863, reflecting a 0.14% decline.
Yesterday’s preliminary Q2 GDP data from the Eurozone came in as anticipated at 0.3% and 0.6% YoY. Moreover, June’s Eurozone Industrial Production outperformed expectations, showing a monthly growth of 0.5%, compared to market predictions of a 0.1% decrease and the previous month’s neutral growth.
Earlier in the week, August’s Eurozone ZEW Survey Economic Sentiment exhibited a better-than-expected figure of -5.5, outpacing both the forecasted and previous readings of -12 and -12.2, respectively. Germany’s ZEW Survey for August also displayed an enhancement at -12.3 against an expected -14.4 and a prior of -14.7. However, these positive Eurozone statistics did not bolster the Euro, with lingering uncertainties regarding economic expansion and inflation.
Conversely, the US showcased impressive economic data. US Industrial Production in July surged by 1.0%, surpassing the anticipated 0.3% and overturning the previous month’s 0.8% drop. Furthermore, Building Permits for July held steady at 1.44 million, while Housing Starts jumped to 1.45 million in July, surpassing the projected 1.48 million, with both metrics exceeding previous estimates and outcomes.
Adding to the mix, the latest FOMC Minutes highlighted persisting concerns over elevated inflation levels. Federal Reserve authorities noted the potential need for more stringent monetary measures to achieve long-term inflation targets. This sentiment further weakened the Euro against a strengthening US Dollar, applying additional pressure on the EUR/USD pair.
Federal Reserve representatives indicated that impending rate adjustments would rely on subsequent data, adopting a more prudent approach in the near future. Market observers now turn their attention to forthcoming releases like the US weekly Initial Jobless Claims and the Philadelphia Fed Manufacturing Survey for August, scheduled later today. From the European side, upcoming announcements include the Eurozone Trade Balance, a speech by ECB’s Philip Lane, and the monthly HICP for July.
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