Euro zone CPI may be higher than expected and force Lagarde to adjust inflation forecasts

2022-06-13 0 By

The risk for eur/USD is that these as-yet undisclosed inflation readings will be lower than expected.The European Union is due to release its advance CPI for March on Friday, with markets now predicting a 6.6 per cent annual rise, up from 5.9 per cent in February.Many believe the war could start to stoke inflation, which in turn would push up the price of commodities such as crude oil.Spain and Germany kicked off the euro zone inflation data today, with the former coordinating 9.8% CPI y/y vs. 7.6% exp. 8.1%;The latter read 7.6% versus 5.5% and 6.7% expected.The CPI annual rate of both countries jumped significantly higher than their respective expectations and previous values.Tomorrow, France and Italy are expected to report inflation of 4.8 per cent and 7.2 per cent respectively.Yesterday, ECB official Holzman said he hoped to raise interest rates by 50 basis points this year, broadening the central bank’s options (hawkish).But ECB President Christine Lagarde said earlier that inflation drivers such as food and energy were expected to remain high, but not “permanently elevated” (modestly).Which of the two would be the prophet?Peace talks between Russia and Ukraine in Turkey have made positive progress, leading to a possible ceasefire.Such optimism led to an initial rally in eur/USD yesterday, which continued today with stronger-than-expected inflation data across the euro zone.Resistance against the current attack at 1.1143 is also the uptrack downtrend line of the channel since May 2021.Euro/dollar attacked it several times in March.Source:Tradingveiw,4 hours chart the above price also fell near the 50% retracement of the high on February 10 to the low on March 7 at 1.1150, as well as the uptrend wedge downtrack uptrend line broken on March 31, if it can be broken, may look around 1.1232,It consists of the aforementioned 61.8% retracement and the aforementioned upwardly wedged uptrack trend line.Above horizontal resistance is seen near 1.1280.If it does get stuck at 1.1150, the March 28 low around 1.0947 is likely to be seen, and if conquered, a major attack on 1.0806 support is possible, which consists of the long term channel downtrack trendline and the lows since March 7.Daily chart support below this level is at 1.0727, the lowest since April 2020.Spain and Germany released march CPI figures that were much higher than expected, France and Italy will publish their own figures tomorrow, and the euro zone’s advance CPI figures are due on Friday.The risk for euro/dollar is that these as-yet-to-be-released inflation readings will come in lower than expected, but a stronger-than-expected reading could force Lagarde to adjust inflation forecasts.Klaus Zhu: Global market host and chief analyst of Piglet Business Show, mainly focuses on foreign exchange, precious metals, stock index futures and other products. He is good at fundamental and technical analysis.Based on years of experience in derivatives trading, Klaus believes that the financial market is an uncertain field, and investors should strengthen their trading psychology and risk control awareness while studying investment strategies.Can achieve the strict implementation of their own strategy, to have a high degree of self-discipline.Klaus holds a bachelor’s degree in finance and has worked in retail forex for many years, where his market analysis and commentary are often taken into account.Klaus holds China Securities Qualification Certificate and Fund Qualification Certificate, and has passed five Chinese CPA exams.Able to provide customers with logical, professional and timely analysis.