EURUSD: US inflation at 2.8% boosts the market
This Friday, the European market focuses its attention on Consumer Price Index (CPI) data and other relevant macroeconomic indicators. The recent release of figures confirms a persistent inflationary environment, with significant implications for the European Central Bank's (ECB) monetary policy.
1. Eurozone CPI: Highest since July
The year-on-year CPI in December rose to 2.8%, exceeding market expectations and marking its highest level since July. This increase reflects the rise in fuel prices during the Christmas season and the rise in leisure and culture, especially in domestic (+20.4%) and international (+14.4%) package holidays. Core inflation also increased, standing at 2.6%.
Average inflation in 2024 closed at 2.77%, significantly below the 3.5% of 2023 and far below the 8.4% of 2022. However, it is still above the ECB's target, which foresees reaching 2% only in 2026.
Impact on financial markets
Inflation data raises expectations about future ECB decisions, whose stance will depend on whether inflationary pressures persist. This directly affects the EUR/USD, which could remain under pressure in a context of monetary tightening.
3. Other key indicators in Europe
- Spain's trade balance: Updated data show a deficit that reflects the dynamics of exports and imports during a year marked by gradual recovery.
- UK retail sales: A key thermometer to measure consumption in an environment of subdued inflation.
- Eurozone current account: A crucial indicator for assessing capital flows and their impact on the stability of the euro.
4. EURUSD analysis:
Currently the Euro has recovered the price from the low of January 13 (1.01766) and currently trades at 1.02947 awaiting European CPI data. The truth is that there is too much volatility in this cross with a very strong downtrend that has lost its November supports and tried to pierce them on the 15th of this month, we will have to see if the economic indicators mentioned facilitate consolidation and overcome the resistance of 1.04506 that prevent the rise to the next range lost in the previous Christmas rally. Currently its RSI is at 52.11% and its control point (POC) is located in the same zone of current price, so it seems to be showing very restricted movements in this last day of the week, which can only be altered with macroeconomic data.
Economic outlook
The rebound in prices, although moderate compared to previous years, remains a challenge for monetary policy. European markets are watching how these figures will impact future ECB decisions, with possible repercussions for the exchange rate and sovereign bond yields.
With a more controlled inflation close in 2024, the path to price stability in Europe remains gradual as investors adjust their strategies in an uncertain environment.
Ion Jauregui - Analyst ActivTrades
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The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
1. Eurozone CPI: Highest since July
The year-on-year CPI in December rose to 2.8%, exceeding market expectations and marking its highest level since July. This increase reflects the rise in fuel prices during the Christmas season and the rise in leisure and culture, especially in domestic (+20.4%) and international (+14.4%) package holidays. Core inflation also increased, standing at 2.6%.
Average inflation in 2024 closed at 2.77%, significantly below the 3.5% of 2023 and far below the 8.4% of 2022. However, it is still above the ECB's target, which foresees reaching 2% only in 2026.
Impact on financial markets
Inflation data raises expectations about future ECB decisions, whose stance will depend on whether inflationary pressures persist. This directly affects the EUR/USD, which could remain under pressure in a context of monetary tightening.
3. Other key indicators in Europe
- Spain's trade balance: Updated data show a deficit that reflects the dynamics of exports and imports during a year marked by gradual recovery.
- UK retail sales: A key thermometer to measure consumption in an environment of subdued inflation.
- Eurozone current account: A crucial indicator for assessing capital flows and their impact on the stability of the euro.
4. EURUSD analysis:
Currently the Euro has recovered the price from the low of January 13 (1.01766) and currently trades at 1.02947 awaiting European CPI data. The truth is that there is too much volatility in this cross with a very strong downtrend that has lost its November supports and tried to pierce them on the 15th of this month, we will have to see if the economic indicators mentioned facilitate consolidation and overcome the resistance of 1.04506 that prevent the rise to the next range lost in the previous Christmas rally. Currently its RSI is at 52.11% and its control point (POC) is located in the same zone of current price, so it seems to be showing very restricted movements in this last day of the week, which can only be altered with macroeconomic data.
Economic outlook
The rebound in prices, although moderate compared to previous years, remains a challenge for monetary policy. European markets are watching how these figures will impact future ECB decisions, with possible repercussions for the exchange rate and sovereign bond yields.
With a more controlled inflation close in 2024, the path to price stability in Europe remains gradual as investors adjust their strategies in an uncertain environment.
Ion Jauregui - Analyst ActivTrades
*******************************************************************************************
The information provided does not constitute investment research. The material has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and such should be considered a marketing communication.
All information has been prepared by ActivTrades ("AT"). The information does not contain a record of AT's prices, or an offer of or solicitation for a transaction in any financial instrument. No representation or warranty is given as to the accuracy or completeness of this information.
Any material provided does not have regard to the specific investment objective and financial situation of any person who may receive it. Past performance is not reliable indicator of future performance. AT provides an execution-only service. Consequently, any person acing on the information provided does so at their own risk.
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