EUR/USD dropped back slightly this morning, as weaker German economic data and continuing unease about the eurozone hurt the single currency.
What little news flow we have seen today has been negative for the euro, after German industrial production dropped by 0.9% during June. The expected fall had been 0.8%, and the data points to the fact that the German economy is continuing to struggle under the weight of the crisis.
I am increasingly beginning to wonder whether the positive atmosphere can be sustained throughout August. ECB bond-buying is apparently on its way in September, but the summer lull, when low volumes predominate, means that a few poorly-chosen headlines could prompt major moves. In addition, the ECB has to wait until Spain formally requests aid, which Madrid still seems nervous about. Until that conundrum is resolved, we might see the more upbeat atmosphere continue to slip away.