EUR/USD drops on weak German data, CPI fears.

📉 Comprehensive EUR/USD Analysis | Selling Pressure Following Germany’s Economic Sentiment Decline

On Tuesday, EUR/USD is hovering near the key support level of 1.1600 after retreating from last week’s high of 1.1700. The latest ZEW Economic Sentiment Index from Germany reveals a sharp drop in expectations for Europe’s largest economy, reinforcing concerns about sluggish growth across the Eurozone.

🔹 The ZEW index fell to 34.7 in August, down from 52.7 in July and below the forecast of 40.0. The Current Conditions Index also dropped to -68.6, weaker than the expected -65.0. These figures reflect structural pressures in key sectors such as chemicals, pharmaceuticals, mechanical engineering, and metals.

📊 From a technical perspective, EUR/USD maintains its short-term bullish structure, but signs of weakening bearish momentum are emerging. The RSI on the 4-hour chart has dipped below 50, and the MACD has issued a bearish signal. The current support lies at 1.1595, aligned with highs recorded on August 3 and 5. A break below this level could expose targets at 1.1530 and 1.1460.

🔺 On the resistance side, a move back above 1.1630 could shift market focus toward the 1.1700 zone, where the 78.6% Fibonacci retracement of the late-July decline intersects with the July 23 and 25 lows and the descending trendline at 1.1735.

📅 Today’s market attention is on U.S. inflation data (CPI), with annual inflation for July expected to rise to 2.8%, up from 2.7%. Core inflation is forecast at 3%, slightly above the previous 2.9%. These figures could be pivotal for the Federal Reserve’s monetary policy outlook.

🗣 Following the CPI release, speeches from key Fed members, including Thomas Barkin and Jeffrey Schmid, may offer further clues about the central bank’s future plans.

📌 In trade developments, the 90-day extension of the U.S.-China trade truce has prevented heavy tariffs and applied limited downward pressure on the U.S. dollar.