Euro-zone headline inflation was confirmed at the post crisis low of 0.5%. Core inflation was downgraded from 0.8% to 0.7%, the lowest post crisis low which was also recorded in late 2013. These are year over year numbers. Official expectations were for a confirmation of the flash data: headline CPI at 0.5% and core CPI at 0.8%. However, soft data from France and from other countries lowered expectations.
EUR/USD was on the rise towards the publication, rising towards 1.3850 just before the release. The pair is now sliding from the highs, but isn’t going too far.
Month over month, prices rose 0.9% in the headline figure and 0.9% in the core.
The euro dropped early in the week after Draghi’s comments over the weekend. The president of the European Central Bank tied between the strength of the euro and monetary policy. The high value of the common currency makes exports less competitive and lowers the rate of inflation.
EUR/USD has support at 1.3830 followed by the round number of 1.38. Resistance awaits at the 2013 high of 1.3894. For more, see the euro dollar forecast.
