Euro Area Inflation Falls Sharply, EUR/USD Slips on Heightened ECB Rate Cuts Expectations

EUR/USD Forecast – Prices, Charts, and Analysis

Most Read: Euro (EUR) Forecast: EYR/USD and EUR/GBP Week Ahead Outlooks

Inflation in the Euro Area continue to fall with the latest reading showing a showing downturn from October’s numbers. Core inflation fell by 0.6% to 3.6%, while headline inflation fell by 0.5% to 2.4%. Headline inflation is now at its lowest level since July 2021, while the core rate is at its lowest level since April 2022. Both readings can in below market expectations.

DailyFX Calendar

Today’s inflation release will add to the recent growing sense that the European Central Bank will trim borrowing rates sooner than previously expected. The latest ECB rate expectations show the first 25 basis point rate cut at the April meeting with a total of 115 basis points of cuts priced in for 2024.

EUR/USD slipped lower post-release but the pair remain within an upward channel that has held for the last two weeks. A break of the channel, around the 1.0900 level may see the pair slip lower with the 23.6% Fibonacci retracement level at 1.0864 the first level of support.

EUR/USD Daily Price Chart

IG Retail trader data shows 38.77% of traders are net-long with the ratio of traders short to long at 1.58 to 1.The number of traders net-long is 11.81% higher than yesterday and 1.89% lower than last week, while the number of traders net-short is 4.27% lower than yesterday and 9.09% higher than last week.

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