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EURUSD Supported As Eurozone Inflation Remains Sticky

The EUR to USD ratio was slipping lower this week, but moving averages kept it supported yesterday. The CPI inflation report from the Eurozone also came higher than expectations, which was another factor in the Euro jump later in the day, so EUR/USD ended the week above 1.08 again.

EUR/USD Daily Chart – The 100 SMA Acting As Support

The 200 SMA is acting as support at the top
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EUR/USD slipped below 1.08 briefly, but it found support at the 100 SMA (green) in the daily chart and bounced from the lows of 1.0795, climbing back over the crucial psychological threshold of 1.0800, bending the week at above 1.0830s. This rebound was aided by soft manufacturing numbers form the US, which fell back in contraction in January, but also by the Eurozone (EU) inflation figures that exceeded expectations, resulting in a positive trigger for the Euro.

Eurozone February Released by Eurostat – 1 March 2024

  • Eurozone February preliminary CPI YoY +2.6% vs +2.5% expected
  • January preliminary CPI YoY +2.8%
  • Core CPI YoY +3.1% vs +2.9% expected
  • Prior core CPI YoY was +3.3%

Yesterday’s inflation report which was released by Eurostat, indicated that the Eurozone’s preliminary Consumer Price Index (CPI) for February rose by 2.6% year-on-year, slightly higher than the expected 2.5%. This reading follows a previous figure of +2.8%. Moreover, the Core CPI, which excludes volatile items like food and energy, increased by 3.1% year-on-year, surpassing expectations of 2.9%. This figure represents a slight decrease from the previous reading of +3.3%, but it’s still sticky.

The persistence of high core annual inflation, despite a slight decline from the previous month, suggests that the European Central Bank (ECB) may face challenges in achieving its target inflation rate of 2% in the coming months. Although the Euro didn’t experience much demand in response to the data, it is unlikely to alter the market’s expectations of a rate cut by the ECB in June, at least for the time being.

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Skerdian Meta
Lead Analyst
Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.
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