Ella 
In early European trading on Thursday, the euro against the U.S. dollar retreated from a seven-month high and consolidated its gains around 1.1010. Eurozone second-quarter (Q2) gross domestic product (GDP) growth data was fully in line with expectations, which boosted the euro against the dollar.
Data released by Eurostat on Wednesday showed that compared with the first three months of this year, the euro zone’s second quarter seasonally adjusted GDP quarterly rate recorded a revised annual rate of 0.6% in the euro zone’s second quarter seasonally adjusted GDP. Both data are in line with market consensus and could boost the euro in the short term.
However, the upside potential for euro area gross domestic product growth may be limited. ING economist Bert Colijn said expectations for gross domestic product growth in the second half of the year have weakened as recent data cast doubt on the strength of the services sector. Markets expect the European Central Bank (ECB) to cut interest rates again in September as the economic outlook remains fragile after keeping key interest rates unchanged at its July meeting.
In the United States, more signs of falling U.S. inflation weighed on the dollar and boosted the euro against the dollar. U.S. headline inflation fell to an annual rate of 2.9% in July from 3% in June. The numbers released by the U.S. Labor Department on Wednesday were lower than expected. The core consumer price index, which excludes food and energy, came in at an annual rate of 3.2%, compared with 3.3% in the previous month, in line with expectations.
Traders are awaiting Thursday’s U.S. economic data, including U.S. retail sales, U.S. jobless claims last week, Philadelphia Fed manufacturing index and industrial production, for fresh impetus. Stronger-than-expected data could support the U.S. dollar and limit the EUR/USD upside.
