Euro remains subdued following German inflation data
EUR/USD extends its losses for the third successive day, trading around 1.1540 during the European hours on Wednesday. The pair holds losses as the Euro (EUR) remains weaker following the release of Germany’s Harmonized Index of Consumer Prices (HICP) data.
German inflation surged back to 2.8% in July, reversing a recent downward trend fueled by a sharp acceleration in energy costs. After slowing to 2.3% in June from 2.6% in May and 2.9% in April, consumer prices gathered fresh momentum. Ruth Brand, President of the Federal Statistical Office (Destatis), noted that energy prices continued to climb at an above-average pace, acting as the primary catalyst behind the month's rising inflation rate.
Eurozone growth surprise bolsters near-term Euro resilience
Rabobank highlights that the Eurozone’s growth pulse has been firmer than markets anticipated, noting that “Eurozone Q2 GDP growth was stronger than expected at 0.4% q/q, compared with a median expectation of 0.2% q/q.” This upside surprise in headline activity data underscores a degree of resilience in the bloc’s economy, even as investors continue to weigh the implications of higher energy costs, lingering supply disruptions and evolving policy expectations for the Euro.
The EUR/USD pair depreciates as the US Dollar (USD) gains ground on increased safe-haven demand amid rising uncertainty surrounding Middle East peace talks. Pakistan’s defence minister indicated that Washington and Tehran were approaching an agreement regarding the Strait of Hormuz, alongside reports that parallel negotiations between Iran and Oman had reached an advanced stage. However, US President Donald Trump insisted that Tehran must pay reparations to the victims of attacks associated with the Islamic Republic, injecting renewed caution into the markets.
Traders are likely observing the upcoming inflation report closely due later in the day, as it is expected to play a major role in shaping the Federal Reserve’s (Fed) next interest rate decision.
Market expectations remain divided over the central bank's rate trajectory following its decision to hold rates steady in July. Although rising crude oil prices have fueled arguments for a more aggressive policy stance, odds for a 25-basis-point Fed rate hike in September have softened slightly, dropping to nearly 48% according to the CME FedWatch Tool, down from 52% the previous day.
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
Pi Network’s PI Defends a Critical Support, Bitcoin (BTC) Reclaims $78K: Weekend Watch

Pons: $20.93 million has been paid to token creators over the past 47 days
XRP’s Crazy August Is Almost Over – September Could Be Even Bigger
Crude oil is "coming back", but refined oil is "not coming back"; the global refining gap is widening.
According to Goldman Sachs, global refined oil exports have declined by about 6 million barrels per day year-on-year, with the Gulf region and Russia contributing three-quarters of the decrease. Unlike crude oil, which can be rerouted, damaged refineries cannot be relocated, and the Gulf region's refined oil exports have only recovered to 40% of pre-war levels. Goldman Sachs expects global refinery utilization rates to recover only by the second half of 2027; based on this, it has more than doubled its forecast for diesel profit margins in 2027.
