The euro gained ground against the US dollar on Tuesday, trading close to the highest point for current session, following the release of series of economic indicators out of the Euro zone and the United States.
EUR/USD touched a session high at 1.3299 at 11:42 GMT, after which the pair consolidated at 1.3285, still up by 0.17% for the day. Support was expected to be received at July 24th low, 1.3177, while resistance was to be encountered at June 20th high, 1.3300.
Earlier on Tuesday an official report stated that consumer price inflation in Germany registered an unexpected increase in July, according to preliminary estimates, as rising prices of food helped annual inflation reach its highest level since December 2012. In July annual consumer price index rose for a third consecutive month to 1.9% from 1.8% in June, while projections showed a lesser rate of increase to 1.7%. In monthly terms, consumer prices rose more than expected in July, by 0.5% instead of 0.3%. Prices of food accelerated by 5.7% in July annually from 5.4% in June.
Additionally, it became clear that consumer confidence in the single currency zone reached its highest point since April 2012. Business sector and consumers in the euro region became more optimistic about their prospects of economic development in the month of July. However, consumer expenditures would not probably rise enough, in order to support recovery in the euro zone. According to data by the European Commission, the Economic Sentiment Indicator (ESI) rose to a value of 92.5 in July from 91.3 in June, marking its third consecutive monthly increase, which suggested that business was more willing to invest and consumers – more willing to spend. Industrial confidence, one of the components of the ESI, showed improvement, reaching a value of -10.6 in July from -11.2 in June. Another element of the ESI, the services confidence index also improved to -7.8 in July from -9.6 a month ago. Last but not least, confidence among consumers reached its highest value since August 2011, rising to -17.4 in July from -18.8 in June, meeting expectations.
Meanwhile, the steady recovery in US housing sector triggered another rise in home prices in 20 major cities. According to the report by Standard & Poors and Case-Shiller in two of those cities prices hit fresh new highs in May. The composite index of home prices advanced by 12.2%, slightly below the expected 12.4% rise. With seasonal adjustments applied, the index rose by 2.4%. Home prices in the United States have been increasing for over one year, as low mortgage rates and the stable increase in employment contributed to demand in a moment, when supply remained relatively weak.
Elsewhere, the euro rose against the British pound, as EUR/GBP pair added 0.40% to 0.8683. In addition, EUR/JPY advanced 0.20% to trade at 130.19.
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