EUR/USD Price Ignores Better-Than-Expected Euro-Zone Inflation Data
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Euro-Zone Inflation Ticks Higher
Euro-Zone inflation increased in November with the headline number printing at 1.0%, up from a prior 0.7%, while the core figure was released at 1.3%, up from 1.1% in October. The uptick was driven primarily by services prices, although, ex-fuel, prices were marginally higher across the board. While the move higher will please the ECB, inflation remains below the central bank’s target. However, if price pressures continue to pick-up, the hawks on the ECB monetary policy committee may start to become more vocal, leaving ECB President Lagarde looking at a growth/inflation balancing act in the months to come.
The single-currency barely moved on the inflation release and remains at 1.1000 against the US dollar. Markets are quiet with the US off yesterday and in, at best, for half-a-day today, while EURUSD volatility is at multi-months lows. Support levels remain unchanged at 1.09891 and 1.0926, ahead of the October 1 low at 1.0879. The spot price remains under all three moving averages, highlighting the pairs ongoing weakness, and if the price breaks lower next week on any of the important US data releases, all three support levels may fall.
There are a cluster of previous highs, along with the 20- and 50-dmas, blocking the upside back to 1.1100 and the pair will need a strong stimulus to test this level.
For all the major economic data releases and the updated events schedule, see the DailyFX Economic Calendar.
The IG Client Sentiment shows that traders are 57% net-long EUR/USD, giving us a bearish contrarian bias.
EUR/USD Daily Price Chart (March - November 29, 2019)
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