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Euro Breaking News: EU CPI On the Rise, Core at 2.3% While Headline Hits 5.1%

Euro Breaking News: EU CPI On the Rise, Core at 2.3% While Headline Hits 5.1%

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EUR/USD Analysis

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EURO ZONE INFLATION BOOSTS HAWKISH BETS, EUR/USD HIGHER

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EU core and headline inflation prints beat estimates (see economic calendar below) with Italian data following suit. The Euro has been appreciating against the greenback this week with strong labour, growth and now inflation statistics. Inflation is likely to remain elevated with rising oil and gas prices plaguing the region.

Euro Zone inflation

Source: DailyFX Economic Calendar

German and French headline inflation figures earlier this week set the scene for higher EU inflation this morning adding to hawkish pressure on the ECB for tomorrow’s interest rate decision. This being said, the ECB is unlikely to change its stance on inflation dissipating later in the year but questions around mounting inflationary pressures are bound to increase.

ECB rates announcement

Source: DailyFX Economic Calendar

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TECHNICAL ANALYSIS

EUR/USD DAILY CHART

EURUSD daily chart

Chart prepared by Warren Venketas, IG

Initial reaction post-CPI has been positive for the Euro as expected retesting the 1.1300 psychological level. A break above this key area of confluence is unlikely to warrant any material change as markets wait patiently for the ECB meeting tomorrow. A hawkish disappointment is likely and could see further downside to subsequent support zones.

Resistance levels:

  • 1.1300

Support levels:

  • 1.1186
  • 1.1100

IG CLIENT SENTIMENT DATA FAVOURS SHORT-TERM UPSIDE

IGCS shows retail traders are currently long on EUR/USD, with 55% of traders currently holding long positions (as of this writing). At DailyFX we typically take a contrarian view to crowd sentiment but recent changes in net long and short positions respectively, results in an upside bias.

EUR/USD Mixed
Data provided by
of clients are net long. of clients are net short.
Change in Longs Shorts OI
Daily 10% -9% 1%
Weekly 2% 16% 7%
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Contact and follow Warren on Twitter: @WVenketas

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

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