EUR/USD: Euro rides high on US economic missteps, hovers around 100-DMA

• EUR/USD trades at 1.0919, gaining 0.36%, as disappointing US labor and GDP data suggest the Fed may hold off on rate hikes.
• US Dollar Index (DXY) loses 0.29% to 103.187, further supporting the Euro, as US Treasury bond yields also edge lower.
• German Harmonised Index of Consumer Prices (HICP) beats estimates, bolstering the Euro and setting the stage for a potential run at the 1.1000 level.

The Euro (EUR) registers solid gains against the US Dollar (USD) as US Treasury bond yields slump due to softer economic data in the United States (US), suggesting the US central bank might keep rates unchanged for the remainder of the year.

EUR/USD gains 0.36% amid weak US jobs and GDP data, while German inflation figures fuel the Euro

Late in the New York session, the EUR/USD exchanges hands at 1.0919, gains more than 0.36%, even though month-end flows usually bolstered the Greenback, but signs of an economic slowdown and high inflation reported in Germany keep the shared currency on the driver’s seat.

Given remarks of the US Federal Reserve Chair Jerome Powell, mentioning that a strong labor market and economic growth above trend could warrant rate hikes by the Fed, data in the last few days checked Powell’s reasons to not raise rates.

The August ADP National Employment report came below estimates of 195K, at 177K, reinforcing Tuesday’s JOLTs report, which began the trend of bad jobs data that could continue tomorrow, with Initial Jobless Claims ahead of Friday’s US Nonfarm Payrolls report.

At the same time, the US Department of Commerce showed the US economy is beginning to stall, as the second estimate for the Gross Domestic Product (GDP) in Q2 came at 2.1%, missing the previously released estimate of 2.4%.

The market participants’ response to the data was seen in US Treasury bond yields, with most edging lower, though pairing its earlier losses. Consequently, the Greenback is on the back foot, as shown by the US Dollar Index (DXY) losing 0.29%, at 103.187.

Across the Atlantic, the Euro was boosted by the German Harmonised Index of Consumer Prices (HICP), increasing monthly and annually based figures. Month-over-month inflation was 0.4% above estimates of 0.3% and 6.4% YoY, above the 6.3% foreseen.

Given the latest fundamental data, the EUR/USD bias would remain upwards, though set for a pullback, before challenging the 1.1000 area. On the upside, the pair would find resistance at the 100-DMA at 1.0925, which might not be easy to surpass ahead of Thursday’s data.

EUR/USD Technical Levels