EUR/USD Gets Help from US Data

EUR/USD staged a recovery today that got support from Wednesday’s US data. Most notably, it showed that the United States has experienced deflation, weakening the case for the Federal Reserve to start tightening monetary policy. It is bad news for the dollar, especially as it came out just a day before the Fed announces its policy decision.
US CPI fell 0.1% in August while most analysts did not expect any change to the index. The indicator was up 0.1% in the preceding month. (Event A on the chart.)
Crude oil inventories dropped by 2.1 million barrels last week instead of rising by 0.7 million as was predicted by experts. Total motor gasoline inventories increased by 2.8 million barrels and were in the upper half of the average range. (Event B on the chart.)
Net foreign purchases were at $7.7 billion in July. The actual figure was much smaller than the predicted $27.5 billion and the previous month’s $101.3 billion. (Event C on the chart.)

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