EUR/USD has started the trading week quietly, as the pair trades in the mid-1.36 range in Monday's European session. On the release front, Eurozone CPI Flash Estimate was within expectations, but German Retail Sales posted a third straight decline. In the US, today's highlight is Pending Home Sales, with the markets expecting a strong gain in the May reading.
Eurozone inflation levels have persistently been at low levels, so there was plenty of anticipation prior to the Eurozone CPI release on Monday. The key indicator didn't cause a stir in the markets, posting a modest 0.5% gain, just short of the estimate of 0.6%. Core CPI Flash Estimate gained 0.8%, edging past the estimate of 0.7%. This follows German Preliminary CPI, which posted a gain of 0.3% after two straight declines. Meanwhile, German Retail Sales, the primary gauge of consumer spending, posted a decline of -0.6%, way off the estimate of +0.8%. This is the indicator's third straight decline, and points to weak growth in the German economy, the largest in the Eurozone.
On Friday, Ukraine signed an association agreement with the EU, which strengthens economic and political ties between Ukraine and the EU. Earlier in the year, the decision by the Ukrainian president not to sign the deal led to widespread demonstrations and the installation of a new government in Kiev. Predictably, Russia is upset about the trade deal and has warned about consequences if its economic interests are harmed as a result of the agreement. The situation remains tense in eastern Ukraine, and a flare-up in violence could rattle the markets and affect the euro.
EUR/USD 1.3646 H: 1.3663 L: 1.3640
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