The Euro has remained pretty rangebound throughout the Asian trading session today and should continue to do so as the market awaits the all important consumer price index figures from the US which are due out later today.
The European currency received some good news yesterday from Europe’s biggest economy with German wholesale prices hitting their highest prices in decades and positive comments from European Central Bank vice president, Luis de Guindos.
Mr De Guindos speculated that inflation in the Eurozone would continue to climb until the end of the year which may lead to a reduction in the ECB stimulus program just as many analysts are predicting the Fed will do by cutting back on their bond buying program.
The predicted rise in inflation seems to fit well with the ECB’s recent policy change where they will allow the inflation figures to rise above 2 percent, albeit if only temporary, in order to boost growth and kick start the economy.
This is in sharp contrast to the central bank’s earlier policy where they were determined to keep inflation below 2 percent to keep prices under control.
As predicted yesterday, the Euro has remained within the tight trading band that was formed yesterday and as we enter the European trading session the EUR/USD currency pair is currently finding support at the lower end of the band which looks to be positive as we wait for the inflation figures from the US.
The release of strong figures may see a retest of the previous support level at $1.1834 which will then bring the support level of $1.1780 into focus as we move into Wednesday and await the testimony to congress by US Federal Reserve president Jerome Powell.