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EUR/USD false break: Euro-zone April CPI only 0.7%, core

Euro-zone inflation rose to 0.7%, below 0.8% expected. Core inflation rose to 1% as expected. Euro-zone  CPI was expected to rise to 0.8% in April from 0.5% in March. Core CPI was predicted to edge up from 0.7% to 1%. The  figure is critical for the next ECB decision and the direction of the euro.

EUR/USD was waiting anxiously for the publication, dipping under 1.38 but not getting too far from the line. The pair drops to 1.3777 in what seems like a false break.

Analysis:  Euro-zone inflation numbers worsens Draghi’s dilemma

EUR/USD is climbing  above 1.38 now. The break under the lows of 1.3785 were not followed. Is this the initial dip before the big fall? Or a false break that will result in a move higher within the range? It seems like the latter.

Here is the chart:

EURUSD false break April 30 after inflation data technical euro dollar chart

The downside surprise is not such a big surprise because of the German number. A core figure of 1% is quite OK. The ECB will probably not be in a rush to act in May, but can move in June, and especially leave all options on the table for June, trying to curb the exchange rate.

Today’s Spanish HICP inflation showed a rise of  0.3% y/y as expected. More importantly, yesterday’s German inflation figures  disappointed, rising less than expected.  Year over year HICP inflation rose 1.1%, up from 0.9% in March.

Earlier, German retail sales came out below expectations while German unemployment dropped by 25K, better than expected.

1.3785 is immediate support, followed by 1.3740. Resistance awaits at 1.3830. For more, see the EUR to USD prediction.

 

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.