The entire increase in the EUR/USD pair this week was held only by the actions of China and the retreat of the USD - the euro itself had no reason to strengthen. Thus, by Thursday the main currency pair backed away from the short-term strategy for profitable growth. At the moment, the main trades are conducted around the level 1.1120. China’s devaluation steps have already taken into account by investors in their market valuations and decided it was time, after all, to refer to the fundamental component, which plays completely against the Euro.
Morning statistics showed that inflation in Germany by the end of July rose by 0.2% m/m and 0.2% y/y. This data is fully in line with the forecast.
Now, having received a portion of macroeconomic reports, the euro/dollar will try to take a place inside the flat. There is still plenty of time before the evening block of reports on the US. In the second half of the session, we will see releases on the number of claims for unemployment benefits in the last week, the release of retail sales for July and a report on inventories in June.
The US retail sales indicator will be, perhaps, the most important signal for the main currency pair today. Among the external risks, I note the preservation of China's focus on the issue of devaluation of the yuan, and this moment will stand tall in the run-up to September, when there should be the meeting between the Chinese and US authorities. Everything that China does in its financial system at the moment looks very much like a new monetary policy. Given the scale of China's economy, it could have an impact on literally everything.