EUR/USD drops on tariff delay talk, stronger US inflation

Dollar strengthens as some tariffs on Chinese imports could be delayed

The euro remained resilient across the early European session, despite mounting evidence that the German economy is heading towards a recession. German ZEW sentiment data dived to -44.1, the worst level in seven years and an exorbitant miss, versus expectations of -28.5 and a previous print of -24.5. The figures point to a serious and significant deterioration in the outlook for the German economy; toxic cocktail of the recent escalation in US – Sino trade tensions, the increased likelihood of a no deal Brexit adding to already soft economic growth. 

Investors will now look ahead to German GDP data due for release tomorrow. The expectation is that the German economy contracted. However, with uncertainty from the US – Sino trade war expected to continue hitting demand for German exports, Europe’s largest economy could well be heading for a recession.

Dollar gains
The dollar rose moderately following the release of US inflation data. CPI increased to 1.8% yoy ahead of the 1.7% forecast. Core CPI, which excludes more volatile items such as food and fuel unexpectedly ticked higher to 2.2% yoy, ahead of the 2.1% forecast. However, the dollar strengthened considerably on the announcement that the US could delay tariffs on some Chinese imports until December. With little in the way of positive news surrounding the US – Sino trade dispute recently, investors were quick to react, pushing the dollar higher. 

Geopolitical concerns, (Hong Kong and China) in addition to ongoing trade concerns, and the impact on global growth, has been a central focus for dollar traders. Recession fears have been growing recently. An easing of trade tensions is a positive for the US economy. This, plus an unexpected tick higher in inflation is proving to be supportive of the greenback. 

EUR/USD levels to watch:
The EUR/USD is trading a range between $1.1250 and $1.1160 and is showing a reluctance to breakout. A move below $1.1160 could open the door to $1.1100 prior to $1.1025. On the upside, a break through resistance at $1.220 could see the pair move higher with more conviction to $1.1250, prior to $1.1280.


This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit for the complete Risk Disclosure Statement.