The USD trend is relatively weak, with Nordic currencies leading
The European Central Bank conducts a monthly survey of consumer inflation expectations, and its report shows that 12-month inflation expectations have decreased from 3.9% three months ago to 3.4%. The three-year outlook has decreased from 2.5% to 2.3%. ECB staff indicated last week that underlying inflation may have already peaked.
The German economy entered the third quarter with weak momentum. It may still be in a recession. After contracting in Q4 2022 and Q1 2023, it stagnated in Q2 2023. Earlier this week, Germany reported a 1.5% decrease in industrial output for June, following a 0.8% decline in retail sales (expected to decline by 0.3%) in the same month. The German 10-year breakeven inflation rate is nearing 2.40%, slightly above the average of 2.30% last month. The seven-year breakeven rate temporarily exceeded 2.40% this week for the first time in three months. However, in the global competition for chip manufacturing capacity, Germany has achieved success twice. Intel is constructing a new plant in Magdeburg (with 10 billion euros in aid from the German government), and Taiwan Semiconductor Manufacturing Company has agreed to build a fabrication plant in Dresden.
The EUR/USD has been trading within the range of 1.0900 to 1.1050 USD over the past two weeks. Today, it is trading within the range of approximately 1.0950 to 1.1010 USD, which was seen yesterday. The technical trend is relatively weak, but certain momentum indicators support the idea of a potential bottom formation. The uptrend line for EUR/USD is based on the lows of March and June.
The German economy entered the third quarter with weak momentum. It may still be in a recession. After contracting in Q4 2022 and Q1 2023, it stagnated in Q2 2023. Earlier this week, Germany reported a 1.5% decrease in industrial output for June, following a 0.8% decline in retail sales (expected to decline by 0.3%) in the same month. The German 10-year breakeven inflation rate is nearing 2.40%, slightly above the average of 2.30% last month. The seven-year breakeven rate temporarily exceeded 2.40% this week for the first time in three months. However, in the global competition for chip manufacturing capacity, Germany has achieved success twice. Intel is constructing a new plant in Magdeburg (with 10 billion euros in aid from the German government), and Taiwan Semiconductor Manufacturing Company has agreed to build a fabrication plant in Dresden.
The EUR/USD has been trading within the range of 1.0900 to 1.1050 USD over the past two weeks. Today, it is trading within the range of approximately 1.0950 to 1.1010 USD, which was seen yesterday. The technical trend is relatively weak, but certain momentum indicators support the idea of a potential bottom formation. The uptrend line for EUR/USD is based on the lows of March and June.