EUR Slips as Dollar Strengthens Ahead of Inflation Data
The EUR/USD pair is trading below $1.16 as the euro comes under pressure from a stronger U.S. dollar, weaker German retail sales, and rising oil prices ahead of Eurozone inflation data.
German retail sales fell 3.4% in July, their sharpest decline in more than four years, compared to expectations for a 0.4% increase. This raises fresh questions over the strength of the German consumer and comes at an awkward time for the ECB, with inflation expected to accelerate to 3.3% in August from 2.9%.
The dollar is benefiting from higher Treasury yields and the more hawkish tone from Fed Chair Kevin Warsh at Jackson Hole. Markets are now pricing in around a 65% probability of a September rate hike, up sharply from last week. The Middle East tensions are also supporting the dollar through safe-haven demand.