EUR/USD retreats from 1.0200, Eurozone GDP, CPI and Fed's preferred inflation in focus

• EUR/USD fails to overcome recent losses and remains sidelined around 21-day EMA hurdle.
• US dollar stays pressured near three-week low as “technical recession” push back Fed hawks.
• Germany’s inflation data, European gas crisis probe pair buyers.
• German/Eurozone GDP, Eurozone CPI precede US Core PCE Inflation to direct short-term moves.

EUR/USD dribbles around 1.0200, after paring most of the daily losses, as traders await the key data from Eurozone and the US. Even so, the bulls remain pressured during Friday’s initial Asian session amid recession fears, following the negative daily close of the previous day.

The major currency pair’s latest rebound could be attributed to the US dollar’s slump amid the market’s expectations of no more aggressive rate hikes from the Fed. The US Q2 Gross Domestic Product (GDP) release could be linked to the same, in addition to the US central bank’s neutral rate chatters and Chairman Powell’s hopes of recovery.

On Thursday, the Flash readings of the US Q2 GDP printed -0.9% Annualized figure versus 0.5% expected and -1.6% prior. Further, the US Initial Jobless Claims also rose more than expected by 253K, with 256K during the week ended on July 22.

It’s worth noting that the various US policymakers, including Fed’s Powell and Treasury Secretary Janet Yellen, tried to shrug off the “technical recession” after the US Q2 GDP dropped for the second consecutive time and teased the concept. The same probes the central bankers pushing for more rate hikes to tame inflation.

On the contrary, Germany’s inflation data flashed mixed signals as the Consumer Price Index (CPI) dropped to 7.5% YoY versus 7.6% prior but the Harmonised Index of Consumer Prices (HICP) climbed to 8.5% yearly, versus 8.2% prior in July. Additionally, the European Commission reported, "In July 2022, the Economic Sentiment Indicator (ESI) plummeted in both the EU (-4.2 points to 97.6) and the euro area (-4.5 points to 99.0), falling below its long-term average.”

Other than the data, fears of economic slowdown in the old continent, due to the gas crisis, also probed the EUR/USD bulls.

Amid these plays, the Wall Street benchmarks closed positive but the Treasury yields slumped and the US Dollar Index (DXY) refreshed its multi-day low while extending the post-Fed losses.

Moving on, the initial readings of German and Eurozone GDP for the second quarter (Q2) of 2022, as well as Eurozone Consumer Price Index (CPI) for July, will be important ahead of the Fed’s preferred inflation gauge, namely the Core Personal Consumption Expenditure (PCE) Price Index, for July.

Also read: Eurozone Inflation Preview: Signs of peak inflation, not yet

Technical analysis

21-day EMA around 1.0230 keeps restricting short-term EUR/USD up-moves but the gradual firming of the RSI (14) line hints at the quote’s further upside. That said, two-week-old horizontal support near 1.0120 challenges sellers.