EZ CPI Rises
EURUSD is rallying today on the back of the latest eurozone inflation data released this morning. The flash CPI estimate was seen rising to 2.7% on headline, up from 2.4% prior and above the 2.5% the market was looking for, while the core reading held unchanged at 2.2%, above the 2.1% the market was looking for. Looking at the breakdown of the data, it seems that a decline in energy prices was offset by a rise in services and food inflation which kept prices higher on average.
ECB Expectations
The data stands at odds with the more dovish tone we’ve heard from the ECB recently and suggests that the uptick in traders ECB rate cut expectations might be misplaced. The market has turned more dovish on the ECB recently in line with signals from policymakers at and between meetings. However, with inflation rising again, the odds of a near-term rate cut look to have weakened, keeping EURUSD supported here.
NFPs On Watch
Looking ahead today, there is room for EURUSD to push higher again if we see any downside surprise in US labour market data. Recent weakness in US data has put US economic fears back in focus. If we see further weakness today, particularly in the headline NFP print, this could see USD unwinding heavily ahead of the weekend, leading EURUSD higher.
Technical Views
EURUSD
The rally in EURUSD has stalled for now into the 1.1503 level. However, the correction has found fresh demand into the 1.1209 support and bull channel lows. While price holds above this region focus is on a fresh push higher with 1.1669 the next target to note. To the downside, 1.0931 is the deeper support level to note if we break lower.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.