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Euro-zone inflation steady at 0.8% – EUR/USD jumps, breaks

Euro-zone headline CPI inflation came out stronger than expected: it remained steady at 0.8%. It was expected to remain unchanged at an annual level of 0.7% in February, in the initial release of CPI. Core inflation rose to 1% after it stood at 0.8% in January. Inflation releases from various countries pointed to a lower figure than 0.7% in the headline number. The publication is critical for the ECB rate decision next week. Will Mario Draghi set a negative deposit rate? Probably not.

EUR/USD was making a move higher from 1.37 to 1.3730 towards the publication and now rises across the double top of 1.3773 and aims towards 1.38.

Analysis:  Euro-zone inflation: a look to February 2013 can explain the surprise

EUR/USD is at the highest levels since December 31st – a two month high. It is also attempting to recapture the broken uptrend support line.

EURUSD February 28 technical breakout two month high strong inflation numbers

More:  EUR/USD Feb. 28 – Breaks to 2 month high above 1.38 on strong inflation numbers

Germany reported a 1% year over year inflation rate according to the HICP, and this was certainly below expectations. Also Spanish CPI fell short. Italy and France are in a stagnation of prices. Italy releases its CPI numbers at the same time, and a rise of 0.5% was expected after 0.2% last time but it actually dropped by 0.1%.

In addition, the euro-zone released the unemployment rate for January, which was expected to remain unchanged at 12%. It came out at 12% as predicted.

Earlier, Germany surprised with a big rise of 2.5% in retail sales. On the other hand, report about a Russian invasion to the Ukraine weighed on the euro.

Support is at 1.3650 and resistance at 1.3773. For more levels, events and analysis, see the euro USD forecast.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.