Euro remains stronger following July’s Eurozone HICP data
EUR/USD rises after registering minor losses in the previous day, trading around 1.1600 during the European hours on Wednesday. The pair holds ground as the Euro (EUR) remains stronger following the release of Eurozone Harmonized Index of Consumer Prices (HICP) data for July.
Euro remains stronger after July's Eurozone HICP data, as the Euro (EUR) trades near 1.1600 against the US Dollar (USD). Eurozone annual inflation climbed to 2.9% in July, matching expectations and staying above the ECB's 2.0% target. Core inflation, which excludes food and energy costs, also increased to 2.5% from 2.4%. Analysts from ING point out that the recent energy price surge is reinforcing the ECB's hawkish stance, citing ECB Chief Economist Philip Lane's warning that Eurozone inflation might remain high for the year and possibly next year due to El Niño-induced food inflation.
Meanwhile, the USD loses ground as US economic indicators show a decline in retail sales and unexpected job losses, dampening expectations of a rate hike by the Federal Reserve. BNY Mellon's strategists caution that the dollar's weakening could accelerate faster than anticipated, citing external inflation risks and domestic inflation drivers such as capital expenditure and demand.
The GBP/USD pair also recovers near 1.3550, with UK annual CPI inflation hitting 2.9% in July, meeting expectations, and core CPI rising by 2.6% YoY. However, mixed UK inflation data does not significantly boost the British Pound. Traders will monitor ECB President Christine Lagarde's speech and the FOMC minutes for further guidance.
Gold climbs above $4,350, with the USD facing some selling pressure and potentially stalling the recent recovery from a two-month low. SHIB, a meme coin, shows improved sentiment and a potential recovery if it stays above $0.0000043.
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