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In Anticipation of Annual Inflation Statistics in the EU

1/6/2023 1:39 PM

The quotes of the European currency continue yesterday's negative dynamics, which was provoked by rather weak macroeconomic data, and are trading around the 1.0510 mark.

First of all, investors paid attention to the inflation report from Italy, where the consumer price index increased by 0.3% in December, despite the expected symbolic growth of 0.1%. Thus, the annual indicator remains at the level of 11.6%, which is almost equal to November's 11.8%. Data on the consolidated consumer price index in the EU will be published today, and, judging by local reports from leading economies, a significant decrease in inflation should not be expected. At least, analysts predict an adjustment of the value to 9.7% from 10.1% a month earlier, which is unlikely against the background of weak downward dynamics of the indicator in France and Italy.              

The US currency decided to reverse the trend of the end of last year and began an upward dynamic. At the moment, the dollar index is testing the mark of 105.0 points, and if today's data on employment in the non-agricultural sector turn out to be better than expected, it is quite possible to overcome this level. As for the growth itself, it began after yesterday's labor market report, according to which the number of initial applications for unemployment benefits in the USA decreased to 204.0K from 223.0K a week earlier. Thus, the total number of people receiving assistance from the state adjusted to 1.694M from 1.718M, while analysts expected a decrease to 1.708M.           

On the daily chart, the EUR/USD pair continues its corrective decline and is heading towards the support line of the ascending corridor.

Technical indicators point out a slowdown in growth, actively narrowing the range of fluctuations: fast EMAs on the alligator indicator are approaching the signal line, and the histogram of the AO oscillator forms new correction bars, declining in the purchase zone.

Support levels: 1.0440, 1.0238. | Resistance levels: 1.0600, 1.0738.

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