EUR/USD Eyes Sub-$1.0950 on Eurozone Inflation and GDP Numbers

Highlights

• It is a busy day ahead for the EUR/USD, with the numbers likely to impact sentiment toward the ECB September policy decision.
• German retail sales figures will play second fiddle to GDP and inflation numbers for the Eurozone.
• The nearer-term technical indicators are bearish, with the bears eying $1.0950.

On Friday, the EUR/USD gained 0.34% to wrap up the day at $1.10130. Softer US Core PCE Price Index numbers delivered much-needed support.

After GDP and inflation numbers from France and Germany, Eurozone GDP and CPI numbers will move the dial today. Softer Eurozone inflation numbers and weak economic growth would fuel bets on the ECB hitting the brakes on the monetary policy tightening cycle.

The ECB is mindful of deteriorating economic conditions, with further interest rate hikes being policy dependent. Softer inflationary pressures and another contraction in the Eurozone economy would force the ECB hawks to take a more cautious stance, a bearish EUR/USD price scenario.

No ECB members are on the calendar to speak, leaving chatter with the media to move the dial.

However, NBS private sector PMI numbers from China set the tone. Hopes of stimulus from Beijing offset the impact of bearish numbers. The NBS Manufacturing PMI rose from 49.0 to 49.3, while the Non-Manufacturing PMI fell from 53.2 to 51.5.

The US Session

It is a quieter US session, with Chicago PMI numbers for July in focus. However, barring a fall to sub-40, investors will likely brush aside the July numbers, with the ISM Manufacturing PMI out on Tuesday.

After softer Core PCE Price Index figures, investors will look for reasons for the Fed to push interest rates higher in September. Employment and prices sub-components of the PMI surveys will influence investor sentiment.

EUR/USD Price Action

Daily Chart

The Daily Chart showed the EUR/USD hover at the lower level of the $1.1060 – $1.1015 support band. However, the bullish Friday session supported a move through the 50-day EMA ($1.09740). The EUR/USD remained above the 200-day EMA ($1.07825), sending bullish near and longer-term price signals.

A EUR/USD hold above the 50-day EMA would support a move through the $1.1015 – $1.1060 support band to target $1.11. However, a fall through the 50-day EMA ($1.09740) would bring sub-$1.0950 into view.

Looking at the 14-Daily RSI, the 48.49 reading sends bearish price signals. The RSI suggests a fall through the 50-day EMAs to give the bears a run at $1.0950.

4-Hourly Chart

Looking at the 4-Hourly Chart, the EUR/USD sits at the lower level of the $1.1060 – $1.1015 support band. After the bullish Friday session, the EUR/USD remains below the 200-day EMA ($1.10115) and the 50-day EMA ($1.10695), sending bearish near and longer-term price signals.

The 50-day EMA narrowed on the 200-day EMA, signaling a fall to sub-$1.0950. However, a EUR/USD move through the $1.1015 – $1.1060 support band and the 50-day EMA ($1.10695) would give the bulls a run at $1.11.

The 14-4H RSI at 42.86 sends bearish EUR/USD price signals, with selling pressure outweighing buying pressure. Significantly, the RSI aligns with the 50-day EMA, signaling a fall to sub-$1.0950.