EURUSD Eases as Euro-Zone Inflation Data Miss Expectations

EUR talking points:

Euro-Zone inflation in April fell to 1.2% year/year; it had been expected to be unchanged at 1.3%.

That makes a total withdrawal of its monetary stimulus program by the ECB marginally less likely this year.

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And for a longer-term outlook take a look at our Q2 forecast for EUR.

EURUSD Eases on Inflation Data

EURUSD slipped back in Europe Thursday after data showed that inflation in the Euro-Zone eased to 1.2% year/year in April rather than holding steady at 1.3% as analysts had predicted. The core measure was also lower than expected at 0.7% year/year, below both the predicted 0.9% and March’s 1.0%.

At the margin, the figure makes a total withdrawal of its asset-purchase program by the European Central Bank towards the end of this year less likely and that prompted an easing of the Euro back below the psychologically important 1.20 level against the US Dollar.

EURUSD Price Chart, Five-Minute Timeframe (May 3, 2018)

Chart by IG

The ECB is widely expected to communicate its plan for ending its QE program in June, though these figures make a delay until September possible. EURUSD has been struggling since mid-April on a combination of weak Euro-Zone economic data and a strong US Dollar, and that downward trend looks set to continue, with the 2018 low of 1.1915 set on January 9 the next likely downside target.

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— Written by Martin Essex, Analyst and Editor

Feel free to contact me via the comments section below, via email at martin.essex@ig.com or on Twitter @MartinSEssex

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