The euro has started the new trading week with slight gains. In the North American session, EUR/USD is trading at 1.0817 at the time of writing, up 0.22% on the day. The euro has reeled off four consecutive losing weeks, declining 2.6% during that period.
There are no economic releases out of the eurozone or the US on Monday, which means we can expect an uneventful day for the euro. Germany releases the GfK consumer climate index on Tuesday, which has been in negative territory for three years. The index is expected to improve to -20.2 heading into November, compared to -21.2 for October. German consumers remain concerned due to high inflation and rising unemployment.
ECB eyeing eurozone inflation
Germany releases September CPI on Wednesday and the markets expect inflation to remain below the 2% target. August CPI fell from 1.9% to 1.6%, the lowest since Feb. 2021. Inflation has been falling but the battle is not over as the core inflation rate is at 2.7% and services inflation at 3.8%, well above the 2% target.
The European Central Bank cut rates earlier this month for a third time this year, bringing the key deposit rate to 3.25%. Will the ECB continue trimming at this year’s final meeting in December?
ECB policymakers are split on whether the central bank needs to respond quickly to headline inflation falling below 2%. ECB Governing Council member Pierre Wunsch sounded hawkish on Monday, saying that a soft landing is likely and “there is no urgency” to accelerate rate cuts. Other members want to discuss a 50-basis point move, although the markets have currently priced in a 35-basis point cut as the most likely scenario at the December meeting.
EUR/USD Technical
- EUR/USD tested support at 1.0809 earlier. Below, there is support at 1.0780
- 1.0826 and 1.0855 are the next resistance lines
