Euro declines ahead of German inflation, US GDP

August 28, 2024 Share Print 0

The euro is sharply lower on Wednesday. In the European session, EUR/USD is trading at 1.1116 at the time of writing, down 0.60% on the day. There are no tier-1 events on today’s data calendar but Thursday will be busy, with German CPI and US GDP.

German CPI expected to ease

Germany, the largest economy in the eurozone has lost its status as the locomotive of Europe and is yet to find its footing. GDP was flat in the second quarter after a 0.1% contraction in Q1, as the weak economy narrowly averted a technical recession. The German consumer remains deeply pessimistic about economic conditions and that likely will dampen consumer spending, a key driver of the economy.

The eurozone follows on Friday with the August inflation report. CPI is expected to ease to 2.2% y/y, down from 2.6% in August. The core CPI rate is projected to tick lower to 2.8% versus 2.9% in July. The data could offer clues about the ECB’s rate decision on Sept. 12. The ECB delivered its first rate cut of the new cycle in June and could trim again as early as next month if ECB policy makers are confident that inflation is moving in the right direction.

The US will release second estimate GDP for the second quarter on Thursday. The initial estimate showed the economy powering ahead with a 2.8% gain, double the 1.4% pace in Q1. The second estimate is expected to confirm the initial reading and confirm that the economy remains in solid shape, despite concerns about a weak employment labor which led to a global market meltdown earlier this month.
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EUR/USD Technical

EUR/USD has pushed below support at 1.1139. Next, there is support at 1.1076
There is resistance at 1.1255 and 1.1318

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Kenny Fisher

Market Analyst at OANDA

A highly experienced financial market analyst with a focus on fundamental and macroeconomic analysis, Kenny Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in major online financial publications including Investing.com, Seeking Alpha and FXStreet. Kenny has been a MarketPulse contributor since 2012.