Euro remains supported above 1.12

The Euro remains well supported above the 1.12 mark as we get ready to enter today’s European trading session after the release of yesterday’s inflation figures from the Eurozone but doubts now linger on the amount of further rate hikes to be delivered by the European Central Bank.

Although the final readings of the Eurozone Core inflation which is the Core Harmonized Index of Consumer Prices (HICP), improved for June on a monthly basis, to 0.4% MoM versus 0.3% previous forecasts, Governing Council member Yannis Stournaras noted that he wasn't sure whether the ECB would hike rates again after 25 bps increase next week. The policymaker also argued that the inflation is falling adding that further increases of interest rates might damage the economy.

Disappointing data out of the US also added to the case for the US Federal Reserve to end their rate hiking program which began during the onset of the Covid 19 pandemic.

US Building Permits for June hit the market at 3.7% versus the previous month’s figure of 5.6% and the Housing Starts figures also slumped to 8.0% which was well down from the previous number of 15.7% which is attributed to higher interest rates.

Looking further ahead today, the main drivers of the EUR/USD currency pair will be the release of the producer price index from Germany which is a key indicator of business confidence although is not expected to create much movement.

From the US we will once again see key real estate data with the release of the existing home sales numbers for the month of June as well as the Philadelphia Fed manufacturing survey which paint a picture on the current state of the business sector in the world’s largest economy.