In May, Germany inflation was lower than projected.
In Germany, inflation, as measured by the change in the Consumer Price Index (CPI), fell to 6.1% year on year in May from 7.2% in April. This estimate fell short of the market’s prediction of 6.5%. The CPI dipped 0.1% month on month after rising 0.4% in April.
The annual Harmonized Index of Consumer Prices (HICP), the European Central Bank’s (ECB) preferred measure of inflation, increased 6.3% in the same time, compared to 7.6% in April and 6.8% expected by experts.
The market reaction
After the data, the EURUSD remains in negative territory below 1.0700. The EURUSD pair did not respond immediately to weak German inflation numbers. And was last seen losing 0.5% on a daily basis. at 1.0682.
The EURUSD soon abandons Tuesday’s modest rise and continues its downturn on Wednesday.
The pair is still under pressure, and a break of the May low at 1.0658 (May 31) might lead to a test of the round level at 1.0600 before the March bottom at 1.0516 (March 15).
A deeper decline to the 2023 low of 1.0481 (January 6) would need a dramatic worsening in the outlook, which does not appear to be in the cards for the time being.
In the long term, the optimistic outlook stays constant as the price is above the 200-day SMA, which is now at 1.0492.
