In the Monday session, EUR/USD has edged lower, as the pair is trading at the 1.1730, down 0.15% on the day. On the release front, German Retail Sales climbed 1.1%, crushing the estimate of 0.1%. Eurozone CPI Flash Estimate remained unchanged at 1.3%, matching the forecast. In the US, today’s major event is Pending Home Sales. The markets are expecting a rebound of 0.9%, after three straight declines. On Tuesday, the US releases ISM Manufacturing PMI, with the markets expecting the index to dip to 56.4 points.

German indicators started the week on a positive note, as retail sales posted a strong gain of 1.1%. This marked the strongest gain since February. Last week, GfK German Consumer Climate strengthened for a fourth straight month, improving to 10.8 in the July report. This edged above the estimate of 10.7 points. Importantly, strong consumer confidence has translated into increased consumer spending, a key driver of economic growth. However, the fly in the ointment remains inflation, which is stuck at low levels. The lack of inflation is a pressing concern for ECB policymakers, and there is little chance that the bank will end its quantitative easing program before December, if inflation levels don’t move upwards.

It’s become an all-too-familiar pattern out of Washington – trouble for the White House has translated into losses for the US dollar, as higher political risk has led to investors moving away from the greenback in favor of other currencies and gold. It was déjà vu on Friday, as President’s struggling healthcare bill gasped its final breath as the bill was defeated in the Senate after three Republican lawmakers joined the Democrats and voted against the bill. This is another setback for President Trump, who has been unable to get Congress to pass any significant legislation, despite the Republicans controlling both the House and the Senate. Trump will now be able to focus on other issues such as tax reform, but investors are skeptical as to whether the President will have the support he needs in Congress to pass major legislation. The US dollar was broadly lower on Friday and the euro climbed to 1.7777, its highest level since January 2015.

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