EUR/USD remains subdued near 1.1650 following German Retail Sales, awaits CPI data

EUR/USD holds losses following the release of German Retail Sales data on Friday.
German Retail Sales climbed 1.9% YoY in July, against a 4.9% rise prior and an expected 2.6% increase.
Headline US PCE is forecast to rise 2.6% YoY, while core PCE is expected to increase 2.9% in July.

Akhtar Faruqui FXStreet

EUR/USD halts its three-day winning streak, trading around 1.1660 during the European hours on Friday. The pair moves little following the release of disappointing German Retail Sales data. German preliminary Consumer Price Index (CPI) data will be eyed later in the day.

The Federal Statistics Office of Germany, Destatis, published the Retail Sales report on Friday, indicating a rise of 1.9% year-over-year in July, following a 4.9% jump reported in June. The market forecast was for a 2.6% increase. Retail Sales dropped 1.5% month-over-month in July versus June’s 1% growth and -0.4% expected.

The EUR/USD pair also faces challenges as the US Dollar (USD) advances, driven by the improved United States (US) Gross Domestic Product (GDP) Annualized data released on Thursday. The US economy grew at a 3.3% annualized rate in the second quarter, against the expected 3.1% increase and 3.0% prior.

Traders will likely observe the US Personal Consumption Expenditures (PCE) Price Index for July due later in the North American session, the last key inflation release before the Federal Reserve’s September meeting. Headline PCE is forecast to rise 2.6% year-over-year in July, while core PCE is expected to increase 2.9% over the same period. The upbeat data may dampen the ongoing dovish sentiment surrounding the US Federal Reserve (Fed) policy outlook.

Fed Governor Christopher Waller said on Thursday that he would support an interest-rate cut in the September meeting and further reductions over the next three to six months to prevent the labor market from collapsing, per Reuters. Moreover, US Vice President JD Vance, in an interview with USA Today on Thursday, end of the Federal Reserve’s autonomy.

Economic Indicator

Consumer Price Index (YoY)

The Consumer Price Index (CPI), released by the German statistics office Destatis on a monthly basis, measures the average price change for all goods and services purchased by households for consumption purposes. The CPI is the main indicator to measure inflation and changes in purchasing trends. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is bullish for the Euro (EUR), while a low reading is bearish.

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