Flash CPI exceeded expectations with a rise to 0.9%. The initial publication for the European Consumer Price Index was predicted to rise to 0.8% year on year. In October, price rises fell to 0.7%, and this triggered the rate cut. Core CPI also exceeded expectations. The unemployment rate was expected to remain at 12.2% yet again but it dropped to 12.1%.
EUR/USD traded around 1.3615 before the publication. Despite the better than expected figures, the euro fails to rise.
While the ECB cut the main lending rate from 0.50% to 0.25%, it still left the deposit rate at 0%. Draghi preferred leaving this “nuclear” option in his arsenal at the moment. Officials at the European Central Bank say that there is low inflation but downplay the risk of deflation.
Earlier, euro-zone figures were somewhat disappointing: German retail sales dropped by 0.8%, well below expectations for a rise of 0.5%. French consumer spending fell by 0.2%, instead of rising by 0.3% as expected. Italy’s unemployment rate remained at a high level of 12.5%, as expected.
Yesterday, Germany reported marginally stronger than expected inflation numbers, and this helped the euro.
Resistance is at 1.3650 and support awaits at 1.3570. For more lines, events and analysis, see the EURUSD forecast.
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