EUR/USD crosses new yearly lows ahead of EU Retail Sales, NFP

EUR/USD is trading near 1.0470, slightly weaker on Tuesday as traders prepare for a busy second half of the week. On Wednesday, the pair is expected to release US PMIs and EU retail sales data.

The annualized EU PPI for August is predicted to decrease sharply, from -7.6% to -11.6%, while Retail Sales for the same period are predicted to fall from -1% to -1.2%. The US Services Purchasing Manager Index (PMI) data for September are expected to show a slight decline from 54.5 to 53.6.

If the US dollar gains strength, EUR/USD should move in the direction of parity. The European Central Bank has officially stopped raising interest rates, and markets anticipate no further rate rises from the ECB for some time.

In the US, the Federal Reserve is observing a minor decline in inflation in the domestic economy. If price growth data picks up, the Fed may decide to raise interest rates more in the future. The EUR/USD continues its decline towards parity, while the Euro is still well off the year’s highs, down over 7% from the peak near 1.275 in July.