EUR/USD remains capped under the 1.1000 mark, Eurozone HICP, US PCE eyed

• EUR/USD hovers around 1.0975 on the weaker German inflation data.
• The November German HICP came in at -0.7% MoM vs. -0.2% prior, worse than expected.
• US GDP for Q3 arrived at 5.2% from 4.9% in the previous reading.
• All eyes are on the Eurozone HICP and US Core PCE data on Thursday.

The EUR/USD pair struggles to gain ground above 1.1000 during the early Asian trading hours on Thursday. The weaker-than-expected German and Spain inflation data weighed on the Euro (EUR). Investors await the Italian, French, and Eurozone inflation data on Thursday for fresh impetus. The major pair currently trades near 1.0975, up 0.01% for the day.

The November German Harmonized Index of Consumer Prices (HICP) fell 0.7% MoM from a 0.2% drop in the previous reading. On an annual basis, HICP inflation eased to 2.3% YoY versus 3.0% prior. This is the lowest point of inflation since April 2021. It is nearly at target and declined from a record high of 11.6% YoY in October 2022. However, the reading came in worse than market expectations and suggested downside risks to Eurozone HICP inflation for November.

On Tuesday, Bundesbank chief Joachim Nagel said the European Central Bank (ECB) may need to raise interest rates again if the inflation outlook worsens. Nonetheless, the market is pricing 95 basis points (bps) of rate cuts next year, beginning in April.

Across the pond, the US Gross Domestic Product Annualized for the third quarter (Q3) arrived at 5.2% from 4.9% in the previous reading, above the market consensus of 5.0%. However, the upside of the Greenback was limited despite the upbeat US growth numbers.

Federal Reserve (Fed) Governor Christopher Waller said Tuesday that inflation currently remains too high, but he stated that progress has been made and the Fed won’t need to hike rates further from here. While Fed Governor Michelle Bowman said he sought to keep alive the possibility of another rate hike, raising concerns about the longevity of inflationary pressure.

Market participants will take more cues from more inflation data, due later on Thursday. The Eurozone HICP annual rate is expected to rise 3.9% in November, below the 4.2% recorded in October. Additionally, the German Retail Sales for October and the Unemployment Rate for November will be released. On the US docket, the US weekly Jobless Claims, the Core Personal Consumption Expenditure Price Index (PCE) for October, the Chicago PMI, and Pending Home Sales will be due on Thursday. These figures could give a clear direction to the EUR/USD pair.