- US dollar weakness helped the EUR/USD pair on Tuesday.
- German macro data beat expectations.
The EUR/USD couldn’t stretch the gains made on the back of better than the expected final version of the German GDP report, which showed a contraction of 9.7 Percent during the second quarter, expectations were at a 10.1 decrease. The German Ifo Business Climate Index beat expectations of 92.2 with a climb to 92.6 in August compared to 90.5 previous. The Current Assessment Index jumped to 87.9 from 84.5 in July, and the Expectations Index edged higher to 97.5 for August from 97.0 earlier.
The optimism was checked by the US’ Conference Board’s Consumer Confidence Index tumble to the lowest level in more than six years, to 84.8 in August. The data renewed fears about US economic recovery and checked the risk-on mood, adding bids to the haven-linked dollar and checking the EUR/USD gains. The upcoming speech by Fed Chair Jerome Powell at the Jackson Hole Symposium is also on the backdrop checking aggressive position building by the market participants and caused some selling in today’s Asian session.
Apart from the German numbers, the optimism in EUR/USD bullishness got a fillip from the news of a potential vaccine against the coronavirus and the easing tensions on the US-China trade relations. Surprisingly, a sharp uptick in the US bond yields didn’t attract the dollar bulls.
The EUR/USD will be dependent on the dollar movement as the day ahead economic docket is scarce in the Eurozone. In the US, July Durable Goods Orders are expected to clock 4.3 Percent increase MoM, a significant slide from the 7.6 Percent increase noted in June. A considerable surprise could attract some market action, but limited in nature until Powell’s speech is over.