The euro is drifting on Tuesday. EUR/USD is up 0.07% on Tuesday, trading at 1.0798 in the European session at the time of writing.
German inflation steady, confidence higher
Germany’s inflation rate remained unchanged in April at 2.2% y/y, matching the market consensus. Services inflation slowed but this was offset by higher food prices. Monthly, inflation rose by 0.5%, up from 0.4% in March and matched the market consensus of 0.4%. This marked the highest monthly gain in 14 months.
The German ZEW economic sentiment indicator climbed to 47.1 in May, up sharply from 42.9 in April and above the market consensus of 46.0. This was its highest level since February 2022 and marked a 10th straight rise in confidence among financial experts. The stronger German data helped push up eurozone ZEW economic sentiment, which rose from 43.9 to 47.0 in April, above the market estimate of 46.1.
Germany’s economy is showing signs of recovery, such as GDP in the first quarter which was stronger than expected. Domestic activity is expected to increase as is the demand for German exports, with the eurozone and China showing stronger growth.
Federal Reserve Chair Powell speaks at an event in Amsterdam later today and the markets will be looking for hints regarding a rate cut. The Fed has delayed plans to cut rates as the US economy remains resilient and inflation has unexpectedly accelerated. A drop in this week’s inflation releases would boost the likelihood of a rate cut in September. The US releases PPI is expected to remain unchanged at 2.4% in April while CPI is projected to ease to 3.6%, down from 3.8% in April.
EUR/USD Technical
- EUR/USD is putting pressure on resistance at 1.0809. Above, there is resistance at 1.0829
- There is support at 1.0788 and 1.0768
