EUR/USD edges higher past 1.0900 as Eurozone, inflation data eyed to confirm Fed, ECB moves

• EUR/USD seesaws at the highest level in two weeks after three-day uptrend.
• US Dollar drops on downbeat US ADP Employment Change, revised down US Q2 GDP favor Fed policy pivot bias.
• Germany’s HICP came in mixed but Euro cheered Greenback’s weaknes.
• Eurozone CPI, HICP and US Core PCE Price Index eyed for clear directions.

EUR/USD bulls attack the 100-DMA hurdle at two-week high as markets await the key inflation data from Eurozone and the US. That said, the Euro pair cheered the US Dollar weakness, while also ignoring mixed data at home, to rise in the last three consecutive days before making rounds to 1.0930 amid early hours of Thursday’s Asian session.

On Tuesday, the softer US data bolstered hopes of an end to the Federal Reserve’s (Fed) hawish cycle and favored the US Dollar sellers while the mixed German inflation clues failed to weigh on the Euro.

Talking about the US data, the second readings of the US second quarter (Q2) Gross Domestic Product (GDP) Annualized declined to 2.1% from 2.4% initial forecasts while the GDP Price Index also eased to 2.0% versus the first readings of 2.2%. Further, the preliminary readings of the Personal Consumption Expenditures (PCE) Prices also edged lower to 2.5% from 2.6% prior estimations for the said period.

More importantly, the ADP Employment Change dropped to 177K compared to 195K market forecasts and 371K previous readings (revised from 324K).

At home, the first readings of Germany’s inflation per the Consumer Price Index (CPI) matched 0.3% market forecasts and prior on MoM basis but edged lower to 6.1% YoY from 6.2% previous readings, compared to the analysts’ estimations of 6.0%. Further, the inflation conditions per the European Central Bank’s (ECB) favorite gauge, namely the Harmonized Index of Consumer Prices (HICP), eased to 0.4% MoM and 6.4% YoY versus 0.5% and 6.5% respective priors, compared to 0.3% MoM and 6.2% YoY marked estimations.

It’s worth noting that European Central Bank (ECB) President Christine Lagarde appeared more hawkish than Federal Reserve (Fed) Jerome Powell in the last week’s Jackson Hole speech as the former clearly cited the need for higher rates versus Powell’s reliance on data dependency.

Elsewhere, China’s reaction to the US allegations that “it’s being risky for businesses” challenged the previous hopes of a smooth running of the Sino-American talks in Beijing. However, a slew of Chinese banks reduced mortgage rates and favored the hopes of witnessing more stimulus from the Asian major, which in turn renewed the market’s optimism.

Amid these plays, Wall Street again closed on the positive side while the US Treasury bond yields remain pressured despite marking an unimpressive daily close.

Moving on, Eurozone HICP and CPI will entertain the EUR/USD traders ahead of the Fed’s preferred inflation gauge, namely the US Core PCE Price Index for August. Also important to watch are the second-tier employment and activity clues from the US.

Should the inflation and activity data arrive downbeat in the US, concerns about the Fed’s policy pivot is likely to gain more acceptance and can propel the EUR/USD price.

Technical analysis

A daily closing beyond the six-week-old descending resistance line, now immediate support around 1.0875, allows the EUR/USD pair to remain firmer while jostling with the 100-DMA hurdle of around 1.0930.