The preliminary print of Eurozone’s harmonized consumer price index (HICP), which gauges inflation trends across European nations will be the point of interest for Euro traders today, since it could indirectly give insights in to how ECB policymakers policy plans onwards.
According to expectations, core inflation, which excludes volatile food and energy prices, across the EU made virtually no progress in May, standing still at the 2.3% level whereas forecasts for headline inflation point to a 0.1% rise of the rate to the 2%. Both rates are now closer to the bank’s 2% target validating calls for additional rate reductions from the ECB, yet policymakers have so far declared that they are in no rush at slicing rates in the upcoming meeting. Money markets nonetheless price in one 25bps cut at the October meeting, which will drag the deposit policy rate down to the 1.75% level.
The Euro, much like the Swiss Franc and the British Pound, capitalized on the severe devaluation of the greenback since the start of the year, since investors feel unnerved from the policy management and outlook of the US administration under the command of Trump, increasingly liquating positions and seek safety abroad.
Besides today’s release, traders are now grappling with the statements of European Union officials and assess their impact, since they showcased preference in cutting a deal with the US involving a 10% universal tariff on many of its exports, but in turn the commission is expected to demand reduced levies from the US on critical sectors such as pharmaceuticals, semiconductors, and commercial aircraft.
Of interest for traders will also be the comments of various heads of central banks as ECB hosts its annual banking conference gathering at Sintra, Portugal to discuss the state of monetary policy.
Technical Analysis
EURUSD Chart – The Euro rallies strongly towards the peak of September of 2021 as the greenback falters
Resistance: 1.1900 (R1), 1.2000 (R2), 1.2100 (R3)
Support: 1.1700 (S1), 1.1580 (S2), 1.1450 (S3)
