EUR/USD Crashing on Higher Unemployment, Lower Inflation

Euro-zone economic figures continue disappoint: the unemployment rate rose unexpectedly to 11.9% while inflation finally fell below the ECB’s target of 2% and hit an annual level of 1.8%.

EUR/USD is getting closer to 1.30. The pair is now trading at 1.3030, after already touching the previous low of 1.3018. It seems that the pair has a lot of support towards the critical 1.30 line. Yet if this support breaks, it could turn into an avalanche.

Update: EUR/USD surrenders to pressure and breaks below 1.30.

Resistance appears at 1.31 and 1.3130, but the most important line is 1.3170. For more levels, see the EURUSD forecast.

Inflation was expected to remain unchanged at 2%, which is exactly the ECB’s target. However, it fell to 1.8% according to the flash target. This could allow the ECB to cut rate.

The unemployment rate was expected to remain at the already high level of 11.8%, but it rose to 11.9%. Other figures also disappointed, especially Italian ones.

Italy’s unemployment rate jumped from 11.3% to 11.7%, far worse than a rise to 11.7% that was expected. Also the quarterly unemployment rate for Q4 was quite bad, leaping from 10.7% to 11.2%, considerably worse than 10.8% that was predicted.

Also the Italian manufacturing PMI disappointed with a drop from 47.8 to 45.8 points. All the economic weakness joins the political mess as Italy’s elections resulted in a deadlock.