Euro retreats below 1.1630 following the release of German Trade Balance data

The Euro (EUR) held steady near 1.1600 against the US Dollar (USD) on Tuesday, following the release of German Trade Balance data. German exports declined by 0.8% in July, while imports fell 5.7%, resulting in a EUR 21.3 billion surplus in July, exceeding expectations of a narrower widening to EUR 16 billion. This contrasted with an unexpected decline in German Industrial Production, which offset an upward revision of the second quarter's Gross Domestic Product.

Although the European Central Bank may raise interest rates by 0.25 percentage points at its upcoming monetary policy meeting, geopolitical tensions continue to hinder Euro rallies, with Iran threatening attacks on energy infrastructure in Gulf countries and the Strait of Hormuz remaining closed. Oil prices, trading above $96 per barrel, pose a significant challenge for Eurozone economic growth.

In the US, nonfarm payrolls data provided some support for the USD, but OCBC analysts believe it insufficient to drive a sustained rally higher. The focus now shifts to this week's CPI, where an upside surprise could strengthen the USD, while a weaker print may keep the pair more volatile.