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Getting Ready to Sell EUR/USD, as ECB Continues to Ignore Higher Inflation
The EUR/USD has turned quite bearish recently, and we are trying to get in on the short side. The trend was bearish, but the momentum has picked up pace in recent days, with the USD turning bullish at last. The FED finally decided to accept the surging inflation as reality, as we highlighted in a Forex update last night.
The CPI (consumer price index) inflation has increased in Europe as well, but the ECB (European Central Bank) is trying to brush it under the carpet, as the FED was doing until recently. So, for now the market is taking it as a dovish sign for the Euro, since it means that the ECB will keep the cash rolling for some time.
EUR/USD Live Chart
EUR/USD
German Inflation Numbers
- Bavaria September CPI +4.2%
- August CPI was +3.9%
- Hesse September CPI YoY +%
- August CPI was +3.7%
- Baden-Wuerttemberg September CPI YoY +3.8%
- August CPI was +3.6%
- Saxony September CPI +4.1%
- August CPI was +4.0%
Remarks by ECB policymaker, Mario Centeno
- Inflation spike still regarded as temporary
- Inflation to return to levels below 2% in 2022
- Eurozone growth expected to continue to grow rapidly
- Best answer to uncertainty is to continue monitoring closely and stand by to act flexibly
- ECB has tools to respond with agility and effectiveness
As much as policymakers are still trying to reassure everyone that the term ‘transitory’ is right, persistent supply chain disruptions through to next year will continue to pose a big problem to the narrative or definition of what is supposed to be “temporary”.
Eurozone August unemployment rate
- August unemployment rate 7.5% vs 7.5% expected
- July Unemployment Rate Was 7.6%
Eurozone unemployment fell in August as expected, in keeping with the improvement seen since the start of the year, as labour market conditions are still gradually improving and heading back towards pre-pandemic levels. Some time is still needed to get a better and more accurate reading of the situation, as furlough schemes are still in place in many parts of the region for now.
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