Core Inflation Starting to Fall in Europe

Posted Tuesday, May 2, 2023 by
Skerdian Meta • 1 min read

EUR/USD has been bullish since the middle of March, after it rebounded from the support zone at 1.0520-30. Moving averages such as the 50 SMA (yellow) and the 100 SMA (green) has been acting as support on the H4 chart. The price broke above 1.10 by the middle of April and it almost reachd 1.11 last week, before the reversal down following the jump in US GDP price index.

Yesterday EUR/USD moved above 1.10 again as the US Dollar weakened furing thjje European session on this liquidity, but retreated to to a level of 1.0966 as USD buyers regained confidence after the higher ISM manufacturing prices. The pair ended last week at 1.1015, with volatility increasing due to hotter-than-expected US inflation figures released towards the end of the month. The price continued to hoover aorund these levels as we awaitied the European CPI inflation report which was released earlier today.

Eurozone CPI Inflation Report from Eurostat – 2 May 2023

  • April preliminary CPI Yoy +7.0% vs +7.0% expected
  • March Cpi was +6.9%
  • Core CPI April YoY +5.6% vs +5.7% expected
  • March core CPI was +5.7%

There is a marginal pickup in headline annual inflation but the core reading is seen slowing slightly in April. That is more or less what the estimates were showing, so it would seem that there is no major surprise to the report here. On the balance of things, this should reaffirm a 25 bps rate hike more than a 50 bps rate hike. I mean if you look at the details, year-on-year food inflation did slow by a full percentage point to 14.7% on the month.

EUR/USD Live Chart

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