Euro Area Consumer Price Index (CPI) Preview (AUG 2024)

Article By: ,  Strategist

Euro Area Consumer Price Index (CPI)

Euro Area inflation slowed in August, with the flash estimate for the Consumer Price Index (CPI) showing the headline reading narrowing to 2.2% from 2.6% per annum the month prior.

Euro Area Economic Calendar – August 30, 2024

FOREX.com Economic Calendar

The core rate also slipped to 2.8% from 2.9% during the same period, with the update from Eurostat revealing that ‘services is expected to have the highest annual rate in August (4.2%, compared with 4.0% in July), followed by food, alcohol & tobacco (2.4%, compared with 2.3% in July), non-energy industrial goods (0.4%, compared with 0.7% in July) and energy (-3.0%, compared with 1.2% in July).’

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EUR/USD Chart – 15 Minute

Chart Prepared by David Song, Strategist; EUR/USD on TradingView

EUR/USD showed a limited reaction to the slowdown in Euro Area inflation but ended up extending the decline from earlier in the week to close at 1.10470. Nevertheless, EUR/USD recovered going into September, with exchange rate registering a weekly close of 1.1085.

Looking ahead, the headline reading for Euro Area inflation is seen narrowing to 2.0% in September from 2.2% the month prior, while the core CPI is expected to hold steady at 2.8%.

With that said, a downtick in both the headline and core CPI may drag on EUR/USD as it encourages the European Central Bank (ECB) to implement further rate-cuts in 2024, but signs of sticky price growth may generate a bullish reaction in the Euro as puts pressure on the Governing Council to further combat inflation. 

--- Written by David Song, Senior Strategist

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