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Euro-zone core inflation downgraded to 0.7% – EUR/USD pressured

The inflation picture remains dire in the euro-zone, with prices falling 0.2% y/y in April as initially reported and now confirmed. Core inflation isn’t much better. It was downgraded to 0.7% as expected and close to the  cycle low. The ECB is in a “wait and see” mode, but perhaps they will not be able to remain this way for too long.

EUR/USD is edging lower,  sliding towards support at 1.1250.

The final inflation figures for April were expected to confirm a fall of 0.2% y/y in prices – outright deflation, but mostly due to oil prices. Core inflation was expected to see a downgrade from 0.8% to 0.7%, a  number with a positive sign beside it but certainly not positive enough for the ECB’s quixotic battle with low inflation / disinflation or even deflation.

EUR/USD has been under pressure  during this session, but this is mostly a result of a stronger US dollar. Several hawkish statements by Fed officials have pushed the greenback higher ahead of the FOMC Meeting Minutes later this evening.

The world’s most popular currency pair has been dropping below 1.13 and reached a low of 1.1256, just above support at 1.1250. Further support is quite close: 1.1220. Resistance awaits at 1.1335 and 1.1460.

Here is how it looks on the chart:

EURUSD May 18 2016 technical chart

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.