• EUR/USD pair extends its loss below the 1.0870 level, a multi-week low.
• Stronger-than-expected Eurozone data failed to support the Euro as economic growth and inflation forecasts remain ambiguous.
• Fed officials emphasised significant inflationary risks and the need for additional tightening of monetary policy.

The EUR/USD pair remains under selling pressure and trades on a negative note for the fifth consecutive day during the Asian session on Thursday. The major pair currently trades around 1.0863, losing 0.14% on the day.

On Wednesday, the preliminary Eurozone Gross Domestic Product (GDP) for the second quarter came in at 0.3% and 0.6% YoY, matching expectations. Meanwhile, Eurozone Industrial Production for June MoM improved to 0.5% versus -0.1% market consensus and 0.0% prior. The monthly Industrial Output data rose by 0.5% versus the estimation of a 0.1% decline.

Earlier this week, the Eurozone ZEW Survey Economic Sentiment for August came in at -5.5, better than the estimation of -12 and the previous reading of -12.2. While the German ZEW Survey Economic Sentiment for August improved to -12.3 versus -14.4 expected and -14.7 prior. The stronger-than-expected data from the Eurozone failed to lift the Euro against its rivals as the prospects for economic growth and inflation are still uncertain.

That said, the upbeat US data and the possibility of a further tightening cycle from the Federal Reserve (Fed) are the main drivers of the US Dollar's (USD) strength. US Industrial Production rose 1.0% in July, better than market expectations of 0.3% and a prior decrease of 0.8%. Additionally, Building Permits for July increased from 1.44 million to 1.44 million, while Housing Starts increased from 1.39 million in June to 1.45 million, above expectations of 1.48 million. Both reports came in above market expectations and prior readings.

Furthermore, the Federal Open Market Committee (FOMC) Minutes emphasised that inflation remained unacceptably high. The Fed official saw significant inflationary risks, and it may need additional tightening of monetary policy to bring inflation to the longer-run target. In response to the data, the Euro continued to weaken against the US Dollar which acts as a headwind for the EUR/USD pair.

Federal Reserve officials endorsed that future rate decisions would be based on the incoming data, but they would be more cautious in the coming months. Hence, market participants will focus on the US weekly Initial Jobless Claims and the Philadelphia Fed Manufacturing Survey for August, due later in the day. On the Euro docket, Eurozone Trade Balance, the European Central Bank (ECB) Philip Lane speech, and the monthly Harmonized Index of Consumer Prices (HICP) for July will be released in the rest of the week.