EUR/USD: September to change the uptrend

EUR/USD has eventually gained ground after the Fed's dovish shift. September kicks off with a full buildup to the all-important Non-Farm Payrolls, with European developments such as inflation – and coronavirus figures – also of high interest, FXStreet’s analyst Yohay Elam reports. 

Key quotes

“The increase in eurozone COVID-19 cases has not materialized into pressure on health systems, nor deaths. However, there is a lag between infections and mortalities. Some countries are cautiously going back to school in early September and any deterioration – especially an outbreak in a school – could trigger setbacks and weigh on the euro.” 

“After the Fed changed its inflation focus, preliminary Consumer Price Index data from the eurozone for August is of interest. Both headline inflation and Core CPI are set to decline but remain within well-known ranges. A drop of underlying inflation to below 1% would be a cause for concern for the European Central Bank.” 

“German retail sales and factory orders are both forecast to advance but at different paces. Consumers are somewhat hesitant to patron restaurants and shop outdoors. Investors will want to see how fast or slow the recovery goes.”

“Will the number of US COVID-19 deaths begin falling? The improvement in case numbers is not reflected in mortalities but could come in early September. Without that, worries about ongoing sluggishness may dog the dollar.” 

“The economic calendar is packed, culminating in Friday's all-important Non-Farm Payrolls report for August. Investors want to see if the lapse of special fiscal stimulus at the end of July – and the ongoing coronavirus crisis – caused the recovery to slow down. A disappointing jobs report could hit stocks and potentially prompt lawmakers to inject more fiscal support. The $600/week federal unemployment insurance top-up lapsed at the end of July and is weighing on the world's largest economy. However, the day of reckoning may wait for later in September.”