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Euro-Zone Inflation Rises for the First Time in a Year

Euro-Zone Inflation Rises for the First Time in a Year

Benjamin Spier, Technical Strategist

THE TAKEAWAY: Euro-zone August CPI rises 2.6% annually according to a flash estimate -> Unemployment rises to highest on record -> Euro higher in today’s session

The Euro-zone annual interest rate rose for the first time in a year according to a flash estimate. August’s consumer price index rose 2.6% from August of 2011, following July’s annual 2.4% interest rate and beating expectations for a 2.5% rate in August.

The Euro-zone unemployment rate was reported at the highest on record in July. The 11.3% rate was in line with expectations and steady with June’s revised 11.3% unemployment. The rising consumer prices could have been a result of rising energy prices, as the high unemployment rate suggests the economy is still suffering.

The slightly higher inflation rate also removes some of the pressure for a European Central bank interest rate cut in the next monthly meeting. Therefore, the Euro rose following the release; earlier today, EURUSD erased yesterday’s losses and returned to 1.2550. The key 1.2500 level could continue to provide support for EURUSD trading in today’s session; the monthly high at 1.2589 could provide resistance.

EURUSD 15-minute: August 31, 2012

Euro-Zone_Inflation_Rises_for_the_First_Time_in_a_Year_body_eurusd_daily_chart.png, Euro-Zone Inflation Rises for the First Time in a Year

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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.