EUR/USD: A stormy day with US inflation data?

The single European currency remains stable near 1,16 level as the previous week's upward momentum continues to be questioned with the exchange rate digesting these levels in anticipation of the very important data on consumer inflation in US.

As bets were relatively divided in the past period regarding the prospect of the Fed cutting interest rates in September or not, today's preliminary data on the course of inflation in America is likely to significantly shift the bets and create the conditions for intense market volatility.

Beyond the important macroeconomic data that is being announced, the issue of trade tariffs remains high on the agenda with President Trump continuing his enigmatic policy and confirming that a controversial personality like his will continue to create surprises, remaining a risk for the markets.

The imposition of different rates of trade tariffs on different countries, the frequent withdrawal of his announcements and the increasingly frequent postponement of the date of imposition of tariffs has now become an everyday occurrence, it is a frequent phenomenon which in any case damages the credibility of the American president and creates concerns.

Today's agenda is complemented by ΖΕW survey on the outlook for the European economy.

Without any major surprises in today's announcement, the overall market picture does not show significant differences with the American currency, although questioned, continuing to offer higher interest rates, while on the other hand, an exchange rate well above the 1.20 level is likely to trigger a danger signal for the European Central Bank, as a high exchange rate could endanger Eurozone's   fragile economy. 

According to the above reasoning, I will remain close to the idea of buying the US currency at some strong peak, but re-examining the levels in case of a surprise today with very low inflation.