Ella 
EUR/USD extends Monday’s losses
European stock markets were on the defensive Tuesday.
EUR/USD returns to the 1.0970 area on the back of dollar buying and China.
The U.S. dollar index (DXY) maintains an uptrend above 102.00.
The euro continued to be under pressure at the start of the week, prompting EUR/USD to retreat below the psychologically important 1.1000 level on Tuesday.
The decline in commodities was further exacerbated by negative indicators from China, which showed a significant contraction in both imports and exports in July. This has strengthened people’s belief that the Chinese economy has not yet seen a significant recovery.
Meanwhile, the U.S. dollar index (DXY) managed to hold above the 102.00 level despite a broad-based decline in U.S. yields.
In the European Central Bank’s remit, surveys of consumer expectations show that inflation in the euro area is expected to be 2.3% in three years’ time, down from 2.5% previously; inflation in the next 12 months is expected to be 3.4%, down from previously 3.9%.
Domestically, final inflation data in Germany was in line with preliminary data, with the Consumer Price Index (CPI) showing a rise of 6.2% YoY and 0.3% MoM.
Across the Atlantic, hawkish Philadelphia Fed President Patrick Harker is due to speak later. Additionally, trade balance, wholesale inventories, NFIB business optimism and IBD/TIPP economic optimism will be released during the session.
Daily market update: Euro holds below 1.1000
EUR/USD retested the 1.0970 area on Tuesday.
The U.S. dollar index (DXY) holds gains above 102.00.
Surveys from the European Central Bank suggest that inflationary pressures will subside in the coming months.
China’s imports and exports contracted more than expected in July.
The CME Group’s FedWatch tool sees no rate hikes in the second half of 2023.
Speculation that the Fed may have ended its rate-hike cycle remained steady.
Investors’ attention remains on US CPI due on August 11.
