Eurozone inflation once again lower than expected. After lower-than-expected readings from Spain, Germany, France (and also Italy), this is not a major surprise. However, the latest readings pose some challenges for the ECB, as inflation is still above the 2% target.
According to preliminary estimates, the euro area inflation rate fell to 2.4% year-on-year in November 2023, reaching its lowest level since July 2021 and falling below the market consensus of 2.7%. Meanwhile, the core indicator, which excludes volatile food and energy prices, also fell to 3.6%, reaching its lowest level since April 2022 and ranking below forecasts of 3.9%.
Energy costs fell by 11.5% (compared to -11.2% in October) and inflation rates fell for services (4.0% vs. 4.6%), food, alcohol and tobacco (6.9% vs. 7.4%) and non-energy industrial goods (2.9% vs. 3.5%). On a monthly basis, consumer prices fell by 0.5% in November, the largest monthly decline since January 2020.
The Eurozone unemployment rate held steady at 6.5% this month, underlining that the recent economic slowdown has not yet had much of an impact on labour market conditions.
EURUSD technical analysis
The EUR has gained nearly 5% against the USD since October. Since the second half of November, the price has been moving in an upward channel. Today, the pair is moving towards the support of the channel, the MACD has entered a downward phase (red bar). Overcoming the support could drive the price towards the support/resistance level of 1.0830.
EURUSD H4- price is moving towards the channel support. Breaking down could result in further declines to the nearest demand zone 1.0850 or lower to the mentioned support/resistance level 1.0830. The MACD on the H4 chart is forming a bearish divergence which supports the above scenario.
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The above analysis is based on the PA+MACD strategy, a detailed description of which you can read HERE . I will talk more about the PA+MACD strategy applied to these currency pairs during the live trading sessions which you can attend from Monday to Friday.
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