Euro area YoY core inflation Declines as YoY Print. EURUSD dips. In the Euro the core inflation rate fell marginally in April, falling in at 5.6%.

Euro Inflation Key Points

YoY Flash (APR) Core Inflation Rate Final 5.6% vs. Expected 5.7%.

Final YoY Flash(APR) inflation rate vs. forecast: 7.0%.

The actual Moonth – Month Flash(APR) Inflation Rate is 0.7% vs. Past 0.9%

In April, the core inflation rate for the Euro Area decreased marginally from March’s reading of 5.7% to 5.6%. Following a rise that began in June 2022. When core CPI was at 3.7% and excluded prices for energy, food, alcohol, and tobacco, core CPI. Comprising these prices, decreased by 0.1%. Despite indications of a decline in consumer spending and stricter situations, the core number remains unpleasantly elevated.

Inflation data of the Euro area

The YoY inflation rate increased slightly from March’s 13-month bottom of 6.9% to 7.0% in April 2023. Energy prices increased by 2.5% compared to -0.9% in March, while service costs increased more quickly at 5.2% compared to 5.1% in March. Contrarily, inflation in these three groups of products decreased to 13.6% from 15.5% of the total. And for non-energy industrial goods to 6.2% from 6.6%. Consumer prices grew by 0.7% on a monthly basis, marking the third consecutive month of growth.

A PEEK IN FRONT AND THE ECB BANK LENDING STUDY

Given the varied economic conditions in the Euro region, the ECB has a difficult job. Prior to their meeting this week, the European Central Bank (ECB) governors have recently embraced a primarily aggressive stance.

We also have the ECB Bank Lending Study earlier today, which reinforced the expectation of a 25bps increase at Thursday’s meeting. According to the loan study, banks have significantly tightened their credit rules for consumers as well as companies. The Eurozone banks have noted a decline in the demand for credit from businesses.

Customers and families were also feeling the effects of this, as loan refusal rates rose and home loan demands fell sharply. As customers’ worries about the state of the economy and general confidence persisted.

The Bank Lending Survey certainly gave some evidence that the economy is becoming less flexible as the impacts of rate rises start to spread. However, the ECB’s officials may still be considering a small rise in the YoY inflation print.

Market Reaction for EURUSD

Prior to bouncing back to trade broadly flat in the days after the announcement. The EURUSD’s immediate response showed a 15 pip decline. As the Euro came under a little selling pressure following the publication of the Bank Lending Look this morning. The duo has been trading close to the current range low near 1.0950 during the early European session. Before tomorrow’s FOMC meeting, the price range between 1.0950 and 1.1050 might continue to remain in place.

The overtime outlook for EURUSD is still a little hazy at this time. Because the technical indicators and fundamental factors appear to be in conflict. Given a technical perspective, an additional fall is likely after the ascending channel was broken on the daily graph. Even while the situation appears promising, an important fundamental analysis that is expected this week. This may have a major impact on where the EURUSD goes ahead.

Major Technical Levels

Resistance Levels:

• 1.1000
• 1.1050
• 1.1125

Support Levels:

• 1.0950
• 1.0900
• 1.0845