- EUR/USD trades in a tight range, slightly above the immediate support of 1.0800 in Tuesday’s European session. The major currency pair struggles for direction as investors have sidelined ahead of the preliminary German and Eurozone Q2 Gross Domestic Product (GDP) and the German Harmonized Index of Consumer Prices (HICP) for July.
- The economic data will indicate whether current market speculation that the European Central Bank (ECB) will cut its key borrowing rates two more times this year are appropriate. Eurozone and German economies are estimated to have grown at a slower pace of 0.2% and 0.1%, respectively. German annual HICP is expected to have decelerated to 2.4% from June’s reading of 2.5%, with monthly figures growing steadily by 0.2%.
- The scenario of slower GDP growth and soft inflation would be unfavorable for the Euro as it will boost expectations of two more rate cuts by the ECB this year. The ECB initiated its policy-easing cycle in June but didn’t cut interest rates sequentially in July as policymakers worry that an aggressive expansionary stance could lift price pressures again.
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