empty
31.07.2024 12:46 AM
EUR/USD. Out of time: the pair ignored important economic reports

During the European trading session, the EUR/USD pair tried to develop corrective growth amid mixed data on Germany's and the Eurozone's GDP. However, the price turned down again at the start of the U.S. session. Traders are clearly nervous ahead of the Federal Reserve's July meeting, the results of which will be announced on Wednesday, July 31. While it cannot be said that market participants completely ignored the European reports, traders are currently anticipating the Fed's verdict.

There is no doubt that the latest reports will resurface in the future when the discussion about the prospects of the European Central Bank's rate cuts in September and subsequent meetings resumes. But at the moment, these reports are useless for EUR/USD, partly due to their contradictory nature.

This image is no longer relevant

Germany's GDP unexpectedly decreased by 0.1% quarter-on-quarter in the second quarter, while most experts expected a 0.1% increase. The German economy grew by 0.2% in the first quarter, while it contracted by 0.5% in the fourth quarter of 2023. On an annual basis, GDP volume increased by 0.3% (in line with the forecast) after a decline of 0.8% in the previous quarter.

In other words, Europe's largest economy showed weak results. However, the Eurozone GDP report was on the other side of the scale. Here, the main components met the forecast or were in the "green." The European economy grew by 0.3% quarter-on-quarter in the second quarter, as in the first quarter. The forecast was at 0.2%. On an annual basis, GDP volume increased by 0.6% (marking the third consecutive quarter of growth).

The Consumer Price Index for Germany was also published on Tuesday. The report supported the euro, especially since it was released ahead of the Eurozone inflation report. The German CPI rose by 0.3% month-on-month in July (in line with the forecast) and 2.3% year-on-year (against a forecast of 2.2%). The harmonized index, the preferred inflation indicator of the European Central Bank, increased by 2.6% year-on-year, while most experts had predicted a more modest growth of 2.4% (June saw a 2.5% increase).

What do we have in summary? Fact #1: The Eurozone economy is growing despite the downturn in the German economy. Fact #2: Inflation in Germany has slightly accelerated, indicating a "green tint" in the inflation report for the entire Eurozone (this report will be released on Wednesday, July 31).

In my opinion, these facts reduce the likelihood of the ECB easing monetary policy in September, especially if the Eurozone inflation rate does accelerate. The suspense surrounding the outcome of the September meeting has intensified — a September rate cut no longer seems like a foregone conclusion.

It is important to recall that the results of the ECB's July meeting were unfavorable for the single currency precisely because the central bank indicated it was still uncertain about a rate cut in September. One phrase from ECB President Christine Lagarde ("Any decision can be made in September") speaks volumes. In answer to this question, the ECB head noted that the issue of a rate cut in September remains open, but the decision will depend on incoming data. Commenting on the Eurozone's CPI report for June (which reflected a slight slowdown in the overall CPI and stagnation in the core index), she stated that the services sector, where inflation is 4.1%, has increased upward risks.

If the Eurozone inflation report for July disappoints the ECB again, the prospects for easing monetary policy in September will be in serious doubt. According to preliminary forecasts, the CPI is expected to slow down in July: the overall CPI (down to 2.4% from the previous 2.5%) and the core index (down to 2.8% from the previous 2.9%) are projected to show a downward trend. However, the puzzle will come together if inflation indicators accelerate (contrary to forecasts). The market will again discuss the ECB not lowering rates in early autumn. In that case, the euro could receive substantial support.

However, regardless of its outcome, do not expect the EUR/USD pair to react immediately to the Eurozone inflation report. Until the Fed's verdict is announced, dollar pairs will be focused solely on the behavior of the US currency, and the EUR/USD pair will be no exception.

However, once the excitement over the Fed's July meeting results subsides, traders will recall the European data. If the Fed does not favor the greenback, the rise in inflation in Germany and (possibly) in the Eurozone could play an important, decisive role in determining the pair's upward trend. However, it's still too early to talk about this. All attention is on the Fed, which will determine the dollar's fate in the medium term.

Summary
Urgency
Analytic
Irina Manzenko
Start trade
Gana con los cambios en el valor de las criptomonedas con InstaForex.
Descarga MetaTrader 4 y abre tu primera operación.
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    UNIRSE AL CONCURSO

Recommended Stories

Análisis del par GBP/USD. El 13 de agosto. A la espera del viernes...

El par de divisas GBP/USD volvió a negociarse de forma bastante apática el martes. Por la mañana, en el Reino Unido se publicaron datos sobre desempleo y salarios, pero resultaron

Paolo Greco 07:38 2025-08-13 UTC+2

Análisis del par EUR/USD. El 13 de agosto. Trump y China llegaron a un acuerdo. Otra vez temporalmente.

El par de divisas EUR/USD volvió a negociarse de forma bastante tranquila. Por un lado, el par no se queda inmóvil, pero al mismo tiempo la volatilidad es baja

Paolo Greco 07:38 2025-08-13 UTC+2

Análisis del par GBP/USD. El 12 de agosto. Una inflación que ya no decide nada.

El par de divisas GBP/USD el lunes se movió de forma muy débil. Como ya dijimos, el trasfondo fundamental sigue siendo fuerte y resonante, pero los traders parecen haberse tomado

Paolo Greco 06:45 2025-08-12 UTC+2

Análisis del par EUR/USD. El 12 de agosto. Nunca había pasado, y ahora otra vez.

El par de divisas EUR/USD el lunes continuó negociándose de forma súper tranquila. El trasfondo macroeconómico estuvo ausente por segundo día de negociación consecutivo, y el trasfondo fundamental el mercado

Paolo Greco 06:45 2025-08-12 UTC+2

Análisis del par GBP/USD. Vista previa de la semana. Un paquete de estadísticas británicas que la libra no necesita.

El par de divisas GBP/USD continúa un sólido movimiento alcista después de una corrección de un mes. Para la corrección había fundamentos técnicos (el precio no puede moverse siempre

Paolo Greco 04:31 2025-08-11 UTC+2

Análisis del par EUR/USD. Vista previa de la semana. Al dólar le esperan nuevas pruebas.

El par de divisas EUR/USD muestra todos los signos de reanudación de la tendencia alcista, que debería llevar el nombre de Trump. La caída de la moneda estadounidense comenzó prácticamente

Paolo Greco 04:31 2025-08-11 UTC+2

WTI - West Texas Intermediate. Análisis de precios. Pronóstico. Trump amenaza a India y China con aranceles adicionales sobre la importación de petróleo ruso, lo que genera preocupaciones sobre la redirección de los suministros.

El petróleo West Texas Intermediate (WTI), que es el referente del crudo estadounidense, rebotó desde un mínimo de cinco semanas y subió por encima de los $63,50 en medio

Irina Yanina 04:25 2025-08-07 UTC+2

Análisis del par GBP/USD. El 7 de agosto. ¿Qué nos tiene preparado el Banco de Inglaterra?

El par de divisas GBP/USD el miércoles volvió a negociarse con bastante calma, pero la balanza poco a poco se inclina a favor de la libra (y también del euro)

Paolo Greco 04:25 2025-08-07 UTC+2

Análisis del par EUR/USD. El 7 de agosto. Trump inicia una nueva ronda de escalada en la guerra comercial.

El par de divisas EUR/USD durante la mayor parte del miércoles volvió a negociarse con una volatilidad muy baja. Esta semana hay realmente muy pocos eventos macroeconómicos, pero al mismo

Paolo Greco 04:25 2025-08-07 UTC+2

Análisis del par GBP/USD. El 6 de agosto. La libra espera el veredicto del Banco de Inglaterra.

El par de divisas GBP/USD se mantuvo prácticamente sin cambios durante la mayor parte del martes. En principio, no hay nada sorprendente en esto, ya que al menos

Paolo Greco 04:23 2025-08-06 UTC+2
¿No puede hablar ahora mismo?
Ingrese su pregunta en el chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.