- Overall, Eurozone price growth increased to 7.0% in April.
- Eurozone core inflation, excluding volatile food and fuel prices, slowed to 7.3% from 7.5%.
- Additional ECB rate hikes will likely occur as service inflation remains high.
Today’s EUR/USD outlook is bearish. On Thursday, the US dollar remained close to a seven-week high as President Joe Biden and top US congressional Republican Kevin McCarthy made efforts to avert a detrimental debt default. Simultaneously, investors reduced their expectations for Federal Reserve easing.
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Eurostat reported on Wednesday that inflation in the Eurozone picked up speed last month, confirming preliminary data that indicated persistent price growth.
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In April, overall price growth increased to 7.0% from the previous month’s 6.9%, driven by higher costs of services and energy, which offset a slowdown in food price growth.
The focus of European Central Bank policymakers has been on underlying price growth in recent months, which slightly decelerated. However, the services component, a crucial indicator, continued to accelerate.
This suggests growing wage pressures that may result in inflation exceeding the ECB’s 2% target. Core inflation, excluding food and fuel prices, slowed to 7.3% from 7.5%. An even narrower measure, which excludes alcohol and tobacco, declined to 5.6% from 5.7% in its first decrease since last June.
Notably, services inflation, primarily influenced by labor costs, accelerated to 5.2% from 5.1%. This confirms concerns among policymakers that nominal wage growth could become alarmingly rapid.
EUR/USD key events today
Investors will watch data from the US that will give clear pictures of the labor, manufacturing, and housing sectors. These sectors make up the larger economy, so the figures will give investors more insight into the state of the US economy.
EUR/USD technical outlook: Downtrend Continuing
EUR/USD bears are in control in the 4-hour chart, and the bearish bias is strong. The price trades below the 30-SMA, which acts as a resistance level. Additionally, the RSI is about to enter the oversold region, showing strong bearish momentum.
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The price has experienced a nearly perfect downtrend with lower highs and lows. It breaks below support levels and retests them as resistance. Currently, the price is heading for the 1.0800 support, which will likely pause before retesting the 1.0850 level.
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