Economic data edges EUR/USD higher

Yesterday’s EU inflation figures missed expectation levels but struggled to surprise the markets.

The EUR/USD headed higher after the release of an EU inflation level of 0.5%, worse than the expected 0.6%. The reaction in the EUR/USD reflects a market that is well aware of the deflationary pressures that are hanging over the eurozone, and the lack of action by the European Central Bank to tackle this.

ECB president Mario Draghi is scheduled to hold a press conference on Thursday, and it is highly likely that he will receive a barrage of questions regarding what action he plans to take. At the same time, it is likely that he will also be pressurised into giving a timetable for these events.

As the markets were coming to terms with worse inflation levels in the EU, they were also digesting Janet Yellen’s latest comments. The tone inferred that the current stimulus the US was injecting into the markets could still be around for a while.

The EUR/USD continues to creep higher as it bounces off the 50-day moving average. The consensus for the EU’s interest rate is to remain unchanged at 0.25%, and there may still be surprises yet to be announced; traders should be wary of this. 

Spot FX EUR/USD chart

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.