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EUR/USD Rebound Post-EZ CPI a Preview for ECB Next Week?

EUR/USD Rebound Post-EZ CPI a Preview for ECB Next Week?

2014-11-28 12:40:00
Christopher Vecchio, CFA, Senior Strategist
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Talking Points:

- EURUSD puts in another higher low on H4.

- USDOLLAR Index can't break 11,372 high.

- See the 'high' importance events on the DailyFX Economic Calendar.

Inflation expectations remain an issue headed into the final ECB policy meeting of the year next week, which is why the Euro hasn’t been able to mount a full-scale recovery so far. The 5Y5Y inflation swaps, ECB President Draghi’s purported favorite market-measure of inflation, fell to a yearly low of 1.437% today.

Nevertheless, the Euro isn't sustaining downside pressures. Nor does it seem to be succumbing to the weak Euro-Zone CPI report today.The breakdown of the November CPI report is important to note. Per the most recent headline HICP reading of +0.3% y/y, the energy subcomponent was -2.5%. Prolonged weaker energy prices are a big reason why inflation continues to run below the ECB’s projections.

See the above video for technical considerations in EURUSD, EURGBP, and AUDUSD.

Read more: EUR Short Covering Elusive as More Talk of QE Inspires Bears

--- Written by Christopher Vecchio, Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

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