What Does the Higher Eurozone Inflation Have in Store for the EUR/USD?

The EUR/USD is pushing higher after the Eurozone Core Consumer Price Index Flash Estimate rose from 0.7% to 1.6% year-on-year. CPI Flash Estimate y/y also came in higher than the previous level of 2.2%, coming in at 3.0%. These figures trumped market estimates (1.5% for the core number and 2.7% on the headline number). 

The unexpected rise in the EU inflation stats has provoked talk of the paring back of the ECB’s QE program, the Pandemic Emergency Purchase Program (PEPP). An ECB policy member Klaas Willem Knot has just lent his voice to the data, saying that outlook could allow the ECB to slow its stimulus and end the PEPP in March 2022.

The development has triggered a jump in the Euro during the New York session, with the pair maintaining the day’s gains at 0.08%. 

EUR/USD Price Forecast

Today’s advance found resistance at the 1.18395 resistance and has pulled back to find support at 1.18008. This support needs to hold firm to maintain the pair’s bullish outlook following the breakout from the falling wedge. 1.18927 remains an additional target to the upside.

On the flip side, a decline below the 1.18008 support allows the bears to aim for 1.17505. Below this level, 1.17036 and 1.16527 could come into the picture as additional targets to the south.

EUR/USD Daily Chart

Follow Eno on Twitter.