Eurozone inflation pressures and robust German producer prices reinforce expectations for further ECB tightening this year.
EUR/USD climbed to 1.1680 in Asian trading, extending a three-day rally as the Euro benefits from hawkish ECB policy expectations. German producer prices surged 3.0% year-on-year in July, exceeding forecasts and marking the fastest rise since April 2023.
The data, alongside a 1.1% monthly rebound, underscores persistent inflationary pressures in the Eurozone. Markets await upcoming PMI releases for further direction, while soaring natural gas prices add to inflation risks.
Despite the Euro’s strength, upside may be limited as US Treasury yields rise, supporting the Dollar. Fed official Musalem’s comments on inflation risks further bolstered the Greenback.