Euro Steady Ahead of Major Economic Data

The single currency is increasing on Tuesday against the backdrop of the inflation in Germany, which is weaker than expected. A preliminary estimate of the inflation for July showed a 0.3% increase in prices and a slowdown in the annual rate from 2.1% to 2.0%. Usually, sluggish inflation growth provokes a weakening of currency, as it implies more dovish rhetoric from Central Bank and potentially delays the increase in interest rates.

But now the situation is slightly different. Last week the ECB confirmed its desire not to raise the stakes until at least next summer. It is highly unlikely that the ECB would break its forward guidance and take this step earlier than it promises now. Under these circumstances, lower inflation increases the real value of the investment in the euro and makes the investment in this currency slightly more attractive.

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Last Thursday inflation forecasts and the promise not to raise the stakes eroded the value of the euro, but with the softening inflation, we observe the rebound of the single currency towards the levels of the last week’s highs. The EURUSD pair is currently trying to gain a foothold above 1.1717. According to technical analysis, the nearest important level of resistance will be the area of 1.1740.

Looking at the economic calendar, Germany retail sales & unemployment rate, France inflation rate, Spain GDP and the Eurozone inflation rate, GDP, and unemployment rate can affect the euro.

This article was written by FxPro

Published by

Ed Anderson

Ed Anderson has over 35 years of experience in the financial markets, having worked in London, New York, Toronto, Singapore & Australia. His early career saw him as an Interbank Trader, Futures Trader & Voice Broker before he moved to electronic trading in the early 2000s. With extensive knowledge of leverage platforms and instruments and as the Chief Market Strategist at FxPro, Ed provides in-depth Fundamental and Technical Analysis, as well as frequent market insights on multiple asset classes, to the benefit of FxPro clients.