EUR/USD Trades at 1.0550 After Spanish and German Inflation CPI
EUR/USD surged 1 cent higher yesterday despite higher US PCE inflation, however, the downtrend will likely resume soon due to the dovish ECB outlook and weak Eurozone economic performance.
The EUR/USD pair has been steadily declining since late September, losing approximately 9 cents from its recent highs. Weak manufacturing and services PMI data from the Eurozone caused the euro to drop another 1.5 cents on Friday, breaking below the 2023 low at the 1.0440-1.0450 range. This breach of the 1.05 level signaled continued bearish momentum for the currency pair.
After its sharp decline, EUR/USD has stabilized and is now trading near $1.06. Month-end flows pushed the US Dollar Index (DXY) lower from a two-year high above 108 points on Friday, offering some support to the struggling euro. However, conflicting Eurozone data and global economic concerns continue to weigh on the currency.
EUR/USD Chart H4 – The 100 SMA Stopped the Surge Yesterday
The euro’s recent losses were triggered by poor PMI figures from Germany and France, showing a contraction in the services sector this month. On Friday, EUR/USD slipped below the 1.0450 support level, marking its lowest point since 2022.
Today’s inflation data from Germany confirmed ongoing economic challenges in the Eurozone’s largest economies, Germany and France. Prolonged weakness in the manufacturing sector, combined with a renewed contraction in services after months of modest growth, has exacerbated the region’s economic woes.
The deteriorating economic data increases the likelihood of a recession in the Eurozone. Until there are signs of improvement in key sectors, the euro may remain under pressure, with the possibility of further declines against the US dollar.
German CPI Inflation for November by Destatis – 28 November 2024
- National CPI MoM -0.2% vs -0.2% expected, down from 0.4% previously
- Bavaria November CPI +2.6% vs +2.4% y/y prior
- Hesse CPI +2.0% vs +1.8% y/y prior
- Brandenburg CPI +1.9% vs +1.8% y/y prior
- Saxony CPI +2.9% vs +2.8% y/y prior
- North Rhine Westphalia CPI +1.9% vs +2.0% y/y prior
- Baden Wuerttemberg CPI +2.2% vs +2.1% y/y prior
Spain November preliminary CPI Released by INE – 28 November 2024
Spain November Preliminary CPI (Released by INE)
- Headline CPI:
- Annual Change: +2.4% (in line with expectations of +2.4%).
- Previous Reading: +1.8%.
- Harmonized Index of Consumer Prices (HICP):
- Annual Change: +2.4% (matching forecasts of +2.4%).
- Previous Reading: +1.8%.
EUR/USD Live Chart
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