EUR: Solid US data and ECB minutes to limit upside – ING

Analysts at ING are looking for a somewhat wider trading range in EUR/USD around the 1.18 level this week.

Key Quotes

“While both the July retail sales report (Tue) and industrial production data (Thu) should be US growth supportive, we doubt that decent activity data will be enough to drive EUR/USD materially lower. Doubts about the pace of additional Fed tightening - one of the factors weighing on the USD - stem more from weak US inflation concerns. We would probably need to see a revival in short-term inflationary pressures - something which last week's US data failed to convincingly show - before markets can positively re-price expectations for a third Fed rate hike later this year.”

“In the Eurozone calendar this week, the main focus will be on the July ECB meeting minutes (Thu); any comments on tighter euro area financial conditions - and what this means for the central bank's inflation and growth outlook - could implicitly be seen as a concern over recent market moves. Overall, we think solid US data - and what may be perceived as ECB "jawboning" - should contain EUR/USD upside in the week ahead.”