Buyers of risky assets in the EURUSD pair continue to knock on the 20th figure, and it seems that they are about to be able to form a breakout. This scenario is only a matter of time, so just be patient. From a technical point of view, the picture has not changed in any way, and the morning tasks have not been implemented. The bulls are clearly aimed at breaking the 20th figure. Another question is whether buyers of risky assets will be able to hold this level. If this happens and the bulls occupy the area of 1.2020, we can expect the upward trend to continue in the area of the highs of 1.2080 and 1.2140. It will be possible to talk about a break in the current upward pattern only if the bears regain the support area of 1.1935. This scenario will lead to a larger downward correction to the area of the 1.1885 minimum, and then to the test of the level of 1.1810.

Today's data on inflation did not scare off buyers of risky assets, although it turned out to be worse than economists' forecasts, signaling its reduction. It is already clear that the August data on inflation in the Eurozone fell significantly short of expectations. This indicates the likelihood of an increase in deflationary factors that are echoes of the coronavirus pandemic. This fact will not be ignored by the European Central Bank, which will avoid tightening financial conditions for a long time.

If inflationary pressures continue to ease in the autumn, the European regulator will probably resort to expanding and extending the emergency asset purchase program in the context of a pandemic (PEPP). However, we should not forget that many countries affected by the coronavirus will soon be able to use the newly created EU economic recovery fund. Therefore, in the short term, the ECB will not feel much pressure due to the decline in prices, which was clearly inevitable after a sharp increase in the early summer of this year, when the quarantine measures were lifted.

According to the data, the consumer price index (CPI) of the Eurozone in August 2020 decreased by 0.2% compared to the same period of the previous year, after an increase of 0.4% in July. Economists had expected the index to grow by 0.2%. Even though global oil and food prices have recovered, this has not led to the deflationary pressures caused by the pandemic. The question is whether core inflation will also slow significantly. If so, this will lead to more decisive steps on the part of the European Central Bank in terms of easing monetary policy. It is not far from another reduction in negative deposit rates.

Today, a number of reports on activity in the manufacturing sector of the Eurozone countries were also published. In general, there is order, and there is no significant slowdown in the growth of activity. For example, in Italy, the purchasing managers' index (PMI) for the manufacturing sector in August was 53.1 points against 51.9 points in July, while it was forecast at 52.0 points. In France, the same index for the manufacturing sector in August fell below 50 points, to 49.8 points, indicating a reduction in the activity. Back in July, it was 52.4 points. In Germany, things are quite calm - the index rose to 52.2 points in August.

This spread of indicators across other Eurozone countries also led to a slight decline in the overall purchasing managers' index (PMI) for the Eurozone manufacturing sector in August to the level of 51.7 points against 51.8 points in July.