Technical Analysis

Euro Steady As German Inflation Accelerates

    Share on Facebook Share on Twitter

    has edged higher for a second straight day, but has pared today’s gains. In the North American session, EUR/USD is trading at 1.007, up 0.09%.

    German Inflation Rises To 7.9%

    German CPI is estimated to have climbed to 7.9% YoY in August, up from 7.5% in July and above the forecast of 7.8%. The jump in inflation was driven by the usual suspects, energy and food prices. Energy prices jumped 35.6% and food prices rose 16.6% compared with a year earlier. With the war in Ukraine raging on and Europe facing a possible energy shortage in the winter, it’s hard to envision inflation in the bloc easing any time soon. The European Central Bank raised interest rates in July but inflation will not be curbed by the current benchmark rate of 0.50%, well below the neutral rate of around 1.5%.

    The has showed some strength since Fed Chair Jerome Powell’s no-nonsense, hawkish speech at Jackson Hole. Powell’s message to the markets remained consistent with the Fed’s pledge to continue raising rates until inflation is brought down, but this time the markets paid attention, as equity markets fell and the dollar gained ground against the major currencies. The glaring exception was the euro, which has managed to hold its own against the greenback. The euro has received support as expectations rise that the ECB could deliver a supersize 75bp increase at its September meeting.

    On Friday, ECB officials attending the Jackson Hole Symposium noted that inflation levels remained high and urged the ECB to deliver a September rate hike of 50 or even 75 basis points. Today’s German inflation report will put added pressure on the ECB to consider a 75bp move, as inflation continues to accelerate. On Wednesday, the Eurozone releases CPI for August, with an estimate of 9.0% YoY, which would be a notch higher than the 8.9% gain in July. If inflation hits 9.0% or higher, the euro could gain ground as expectations for a 75bp hike will increase.

    EUR/USD Technical

    EUR/USD has support at 0.9985 and 0.9880
    There is resistance at 1.0068 and 1.0173

    EUR/USD Daily Chart.

    This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

    Originally Published Here -Source link

    0 0 votes
    Article Rating

    Fed’s Williams pushes back on market expectations of a rate cut next year

    Previous article

    Asia FX Arrests Losses as Dollar Stalls at 20-Year Peak By

    Next article

    You may also like

    Notify of
    Inline Feedbacks
    View all comments