Market Spotlight: Latest Data Shows Eurozone Inflation Battle Still A Close Call
EUR Falls on Inflation Data
EUR is trading lower today on the back of the latest flash eurozone inflation data released this morning. The first look at CPI for last month showed the headline reading cooling slightly to 8.5% from 8.6% prior year-on-year. However, this was a touch above the 8.3% the market was looking for. Additionally, core CPI was seen rising to 5.6% from the prior and expected 5.3% level. In all, the data showed that inflation was stickier than expected last month. However, looking at market reaction (EUR down, euro stocks up) it seems the market is focusing on the headline that eurozone inflation cooled last month.
Further ECB Tightening to Come
Based on the ECB’s insistence that here is further to go on rates this year, today’s data does little to suggest that the time has come for an ECB pivot. A further .5% hike is priced in this month and with inflation holding around current levels, a further .5% hike in May still looks like a good bet unless March and April data cool significantly. With this in mind, EUR might start to head higher again soon especially if we hear any further hawkish ECB commentary.
Technical Views
EURUSD
The correction lower from the highs around the 1.10 level and channel top has seen the market trading back down through the 1.0785 level. Price is currently stalled around mid-channel ahead of support at the 1.0364 level and channel bottom. This will be a key area for bulls to defend with a break below there opening the way for a test of 1.0088 next.
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With 10 years of experience as a private trader and professional market analyst under his belt, James has carved out an impressive industry reputation. Able to both dissect and explain the key fundamental developments in the market, he communicates their importance and relevance in a succinct and straight forward manner.