euro-bank-notes - EUR
  • Euro (EUR) trades on the back foot as sentiment drives the pair lower
  • German ZEW sentiment data expected to show an improving mood
  • US Dollar (USD) investors digest fresh US – Chinese tensions and a stark warning from the WHO after 230,000 new covid cases in just 24 hours.
  • US inflation expected to show +0.5% increase month on month, up from -0.1% decline in May

The Euro US Dollar exchange rate (EUR/USD) is moving lower after two straight days of gains. The pair settled on Monday +0.3% at US$1.1342. At 07:15 UTC, EUR/USD trades -0.1% at US$1.1326.

Risk aversion dominates as covid numbers surge and California puts some lockdown restrictions back in place. The risk off trading is dragging on the Euro and boosting the US Dollar.

There were no surprises from German inflation data which showed that German consumer prices rose 0.6% as expected. On an annual basis inflation increased 0.8%, well below the 2% target.

Sticking with the economic calendar, investors are turning their attention the German ZEW sentiment data which could give further clues over the strength of the economic recovery in the Eurozone’s largest economy. The economic sentiment reading is expected to improve to 60 in July. A strong reading could help lift the Euro.

The US Dollar is trading within a narrow range amid elevated US – China tensions over offshore resources in the South China Sea and as coronavirus cases continue to surge in the US and across the globe.

The World Health Organisation gave a stark warning that the coronavirus pandemic could get worse, with too many countries headed in the wrong direction. His comments come after a record 230,000 new cases were announced in the worst day of the crisis so far. Global cases tally 12.5 million, am increase of 12% in just one week.

Looking ahead investors will turn their attention to US inflation numbers. Analysts are expecting consumer prices to increase +0.5% month on month in June, up from -0.1% in May. This would support the idea t hat the US economic recovery is on track. However, fears are growing that with 60,000 new covid cases a day, lockdowns will soon be back in place undoing the economic recovery so far.