We've seen this story before already last month and this seems like a bit of repeat, albeit with toned down market expectations at least. There's still no certainty with regards to September but further disappointment in economic performance isn't going to make it easy for the ECB to balance that against higher inflation.
EUR/USD had inched a little higher to 1.1146 earlier as the dollar did lose some marginal ground (mostly just the narrow ranges stretching out), but is now trading back down to 1.1124 on the day. If we do see Germany follow this up with another setback, that could see the euro lose a bit more ground on the day.
That said, this doesn't change the fact that the ECB will still raise interest rates by 25 bps later this week. As such, any reaction to the data today is likely to be more measured and restrained.
