EUR/USD holds steady above 1.1000 ahead of US Retail Sales data

• EUR/USD hovers around 1.1010 in Thursday’s Asian session. 
• Eurozone GDP climbed 0.3% in the three months to June, matching the estimate.
• US CPI inflation was in line with market consensus. 

The EUR/USD pair consolidates its gains near 1.1010 after retracing from the fresh seven-month top during the Asian session on Thursday. The Eurozone Gross Domestic Product (GDP) growth figure for the second quarter (Q2) printed exactly as expected, which lifted the Euro (EUR) against the Greenback. 

Data released by Eurostat on Wednesday revealed that the Eurozone economy grew 0.3% QoQ in Q2 compared with the first three months of this year. On an annual basis, the economy expanded 0.6%. Both figures came in with the market consensus and might boost the shared currency in the near term. 

However, the upside to GDP growth might be limited. ING economist Bert Colijn said, “With recent numbers casting doubt about service sector strength, expectations for GDP growth in the rest of the year have weakened.” The markets expect the European Central Bank (ECB) to cut rates again in September as the economic outlook remains fragile after it left its key interest rates unchanged at its July meeting. 

Across the pond, more signs that inflation in the US is cooling down weigh on the USD and create a tailwind for EUR/USD. The US headline CPI inflation dropped to 2.9% YoY in July from 3% in June. This figure was softer than the estimation, the Labor Department showed on Wednesday. The Core CPI, excluding food and energy, rose 3.2% YoY, compared to a rise of 3.3% seen in July, in line with the market consensus. 

Traders await the release of US economic data on Thursday for fresh impetus, including US Retail Sales, weekly Initial Jobless Claims, the Philly Fed Manufacturing Index and Industrial Production. The stronger-than-expected readings could support the Greenback and cap the pair’s upside.