Forex: EUR/USD: Eurozone’s CPI in line with forecasts

on Nov 15, 2013
Updated: Oct 21, 2019
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**iNVEZZ.com, Friday 15 November:**

The just-released Eurozone Final CPI for October y/y checked in at 0.7 percent, matching the preliminary estimate. Annual inflation in the euro area slowed down markedly to a four-year low from September’s 1.1 percent, provoking a surprise rate cut by the European Central Bank last week.
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According to the ECB’s Survey of Professional Forecasters for Q4 published yesterday, inflation in the Eurozone will remain below the central bank’s 2.0 percent target for the next few years, while growth will gather momentum. Despite renewed speculation that the euro area faces deflationary risks, experts believe the probability of outright deflation in the next five years is below 1.2 percent (see chart below). Although only five out of the 17 Eurozone member states have headline inflation above one percent, forecasters expect the annual average rate of price increases in the euro area to be 1.4 percent this year and edge up to 1.5 percent in 2014.

[!fm[](/uploads/story/6840/infl.png)](# “”)

So far today, the EUR/USD has been well supported around the 89-period Simple Moving Average (red line on the chart below). If the pressure from short-sellers rekindles, the pair could drop to 1.342, which is the 23.6 percent Fibonacci retracement of the decline from the 2-year high of 1.3832. The technical level is near convergence with the short-term rising trend line, which has limited the bearish efforts since the ECB rate cut.

[!fm[](/uploads/story/6840/eurrr.png)](# “”)
To the upside, the euro could struggle around the 38.2 percent Fibo at 1.3499, before aiming at the 4-month channel support, which has acted as resistance so far this week.
The US economic calendar today offers the Empire State Manufacturing Index for November at 13.30 UTC and October’s Industrial Production at 14.15 UTC.
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Right now, the EUR/USD is trading around 1.3448, down 0.09 percent intraday.
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