Today's inflation report from the eurozone turned out to be unexpectedly weak. Still, this is not preventing the common European currency to continue its recovery against the US Dollar started this morning before the report. It well may be that the Euro currency was supported by the stronger-than-expected report from the European labor market. It appears that the rate of unemployment in the eurozone is going down, which is definitely good news for the common currency. The employment report came out simultaneously with the inflation report.
Meanwhile, experts believe that the low rate of inflation far below the target will make the ECB get down to active measures in June. The thing is that the rate of inflation in Europe reached the minimal level of 0,5% in May, thereby putting even more pressure on Mario Draghi and his fellows in the ECB. The rate is below the 0,7% expected by the central bankers and analysts. It is also below the 0,7% seen in April. The March figures indicated a 0,5% increase. Before that, the such a low level of inflation was seen only in November 2009.
The current rate of inflation is far below the 2,% target set by the ECB. So, the ECB is trying to ease its monetary policy to make the rate of inflation CME loser to the target.
Economists and other financial experts assume that the ECB is determined to cut interest rates during the forthcoming meeting. Moreover, some of them expect the central bank to make an unprecedented step – to introduce negative interest rates.
EURUSD
Meanwhile, Masterforex-V Academy indicates a rally started by EURUSD this morning futher after the news reports even though the instant reaction was a decline. At this point, the Euro is 0,1% up against the US Dollar.
The H1 chart indicates that the overall bias is still bearish. So, the price is likely to retest the local low at 1,3585. If the level proves strong, this may indicate the bulls' strength at this point.
EURUSD may continue its growth up to 1,3623 and above if it manages to break above the sloping channel (marked red).
Alternatively, while the price is below the top of the descending MF sloping channel, the bearish scenario is more likely. The closest targets to watch are 1,3585 and 1,3562.
