The preliminary readings of the Eurozone inflation suggested that the price growth in the single market is lacking the momentum needed to reach the European Central Bank’s inflation target.

This further justifies the central bank’s cautious stance in removing monetary stimulus.

The Eurozone Consumer Price Index, published at the beginning of May, showed a slow down to 1.2% year on year in April, down from 1.3%.

Core CPI was even worse, slowing to 0.7% year on year, down from 1.0% year on year.

Market experts are divided into 2 groups:

1. Bullish factors for the EUR
   • The Eurozone economy loses momentum in Q1 but remains resilient.
   • While interest rates are rising in the US, the current account deficit is large.
2. Bearish factors for the EUR
   • The Federal Reserve is expecting to raise interest rates 3 more times in 2018.
   • The Eurozone has seen a series of weak indicators recently.

What do you think? Will the EURUSD rise or fall?

What is the Eurozone Core CPI?

The Core Consumer Price Index (CPI) is a key indicator released by the European Commission’s statistics agency.

It measures the change in the price of goods and services of a representative shopping basket from the perspective of the consumer.

Unlike the CPI, the Core CPI data excludes volatile components like food, energy, alcohol and tobacco.

The Core Consumer Price Index is considered a key indicator to measure changes in purchasing trends and inflation and in setting the European Central Bank’s monetary policy.

Generally, a higher than expected reading should be taken as positive/bullish for the EUR, while a lower than expected reading should be taken as negative/bearish for the single currency.