The EUR/USD currency pair rallied to new highs today after the release of positive CPI data from the Eurozone. The euro gained significantly against the US dollar as the Eurozone inflation figures for the month of April released by Eurostat exceeded expectations.
The currency pair gained over 70 points at the height of its rally as investors bought the pair due to the better economic outlook signaled by the CPI data.
The CPI data from the Eurozone for April came in at 1.9% versus the expected 1.8% and the previous figure of 1.5%. The CPI data from the Eurozone also beat expectations by coming in at 1.2% as compared to the expected 1.0% and the previous figure of 0.8%. Although the inflation figures indicated that most European Union economies were performing much better, the core inflation data was still way below the European Central Bank‘s target of 2.0%. This means that the ECB President, Mario Draghi, is likely to maintain the bank’s dovish policies.
The release of the ECB Survey of Professional Forecasters earlier today painted a dovish picture of inflation expectations within the Eurozone. The survey revealed that core inflation was expected to be at 1.1% throughout 2017 and would rise to 1.3% in 2018. Headline inflation is also expected to rise to 1.6% in 2017.
The currency pair is likely to be affected by the release of the annualized GDP figures for the US scheduled for 12:30 GMT.
The EUR/USD was trading at 1.0932 as at 11:29 GMT having rallied from a low of 1.0854 prior to the release. The EUR/JPY was trading at 121.75 having rallied from a low of 121.61.
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