November 30, 2023 - Written by David Woodsmith
STORY LINK Euro US Dollar Exchange Rate: Corrective Retreat after Euro-Zone Inflation Data
The Euro to Dollar exchange rate (EUR/USD) was subjected to a correction after failing to hold above the 1.10 level and there was further selling after Thursday’s European open.
The inflation data from France, Spain and German came in well below expectations, reinforcing expectations of weak Euro-wide data.
The headline Euro-Zone inflation rate declined sharply to 2.4% from 3.2% previously. This was below consensus forecasts of 2.7% and the lowest reading for over two years.
The core rate also declined to 3.6% from 4.2% which was below expectations of 3.9% and the lowest reading since May 2022.
Energy prices declined 11.5% over the year while the services-sector inflation rate slowed to 4.0% from 4.6% in October.
Following the data, EUR/USD dipped to just below 1.0910 before a rebound to 1.0920.
According to ING; “This shows that signs of an imminent victory on inflation are mounting for the European Central Bank. When will they dare to admit so themselves? We expect a first rate cut before the summer.”
Commerzbank is more cautious over the outlook; “Today's price data is likely to fuel speculation that the ECB will soon cut its key interest rate. However, we think it is too early to declare victory over inflation, given the strong rise in wages.”
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TAGS: Euro Dollar Forecasts