EUR/USD has posted slight losses in the Wednesday session. Currently, the pair is trading at 1.1712, down 0.28% on the day. On the release front, there are no major German or European events. ECB President Mario Draghi spoke at an event in Frankfurt but did not comment on monetary policy. In the U.S, the focus is on inflation reports, with US PPI and Core PPI both expected to soften to 0.2%. On Thursday, Germany releases Final CPI and the ECB publishes its minutes from the June policy meeting. The US will release CPI and Final CPI as well as unemployment claims.
Investors remain uneasy about the tariff battle being waged between the U.S and its major trading partners, particularly China. After the U.S and China imposed tariffs on each other of some $30 billion, the Trump administration has raised the ante, threatening to hit China with further tariffs on $200 billion worth of Chinese goods. China cannot retaliate in kind, since it does not import that amount of goods from the U.S. Still, the Chinese can take steps which will make it more difficult for U.S companies to do business in China. The U.S dollar has benefited from the recent trade battles, and if this trend continues, the euro could be facing some substantial headwinds.
Financial experts gave a thumbs-down to the eurozone’s economic outlook, according to the June ZEW Economic Sentiment indicators. The German and eurozone releases both dropped to their lowest levels since August 2012, dropping to -24.2 and -13.4, respectively. The surveys point to concern over the eurozone’s economic outlook for the next six months. Internal divisions within the EU over migration and fears of a full-blown global trade war have investors worried that the eurozone could be heading into significant headwinds, which could send the euro downwards.
