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According to the initial release of CPI in the Euro-zone, inflation eased to an annual rate of 2.7%, lower than 2.8% in April and expectations that stood on the same level.

The drop in the consumer price index reflects the drop in commodity prices seen in May. One of the triggers to the drop in commodity prices was the rate decision by the ECB at the beginning of May, in which president Jean-Claude Trichet hinted that no rate hike would be seen in June.

This initial figure is usually confirmed at the final release, but we still need to see the Core CPI – to see if there were “secondary effects”.

In other European news, the unemployment rate for the whole Euro-zone remained high, at 9.9%, as expected.

EUR/USD remains strong on fresh hopes for Greece. According to the Wall Street Journal, Germany has agreed to more concessions – an additional bailout program for Greece. This comes despite growing anger in Germany and all over the continent over these bailout programs.

For more on the Euro, see the EUR/USD forecast.

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