The EUR/USD pair edged slightly higher on Thursday ahead of the US weekly initial jobless claims data. The pair rose to 1.18743, its highest level since Wednesday last week.

EUR/USD Outlook

Eurozone Economic Concerns

The EUR/USD pair will react to Eurozone’s key inflation data to be released on Friday. European Consumer Price Index for July is expected to slightly rise to 2.0% YoY up from 1.9% in June. Investors are closely watching the numbers to gauge whether the ECB will taper its monetary policy soon.

The European Gross Domestic Product (GDP) for the second quarter will also be released on Tuesday. July’s GDP is expected to improve despite the surge in coronavirus cases. Many European stocks posted strong profits for the second quarter.

The European Unemployment rate for June is scheduled to be released on Friday. The unemployment rate is expected to remain at a standstill at 7.9% due to the rising concerns of staff shortages in most firms.

US Inflation Concerns

The Federal Reserve’s dovish tone seemed to calm market fears amid a surge in inflation. After its two-day policy meeting, the Fed decided to maintain its fund rate at the current target range of 0%-0.25%. According to the Fed, inflation has risen, albeit reflecting transitory factors.

The committee announced its aim to achieve inflation above 2% in the long term. This would signal stability in the inflation surge. After the 2% aim is met, the Fed announced that it would open discussions to taper its stimulus.

The Federal Open Market Committee (FOMC) increased the System Open Market Account holdings of Treasury securities by $80 billion per month and of agency mortgage-backed securities (MBS) by $40 billion per month.

The EUR/USD will react to the US GDP numbers that will be published later today. The GDP is expected to advance 8.5% for the second quarter up from 6.4%. This will be the best performance since the third quarter in 2020.

The US weekly initial jobless claims data is scheduled to be released later in the day. The jobless claims are expected to dip to 380,000 from 419,000 in the previous week.

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