EUR/USD recovers as Germany WPI and France CPI beat forecast
Improved Eurozone inflation data lends temporary support to EUR/USD
The EUR/USD pair took a significant hit this week, dropping for five consecutive days to its lowest level in 2024.
However, the slide was halted at the crucial 1.0500 support level, giving bulls the chance to regain control. In today's European session, the pair has bounced back above 1.0550, indicating some temporary relief for euro enthusiasts.
The Euro recent recovery stems from Germany’s Wholesale Price Index (WPI) which has shown some improvement, rising 0.4% in October against a 0.1% forecast. This uptick points to mild inflationary pressures at the wholesale level, which could translate into higher consumer prices down the line. Meanwhile, France’s Final CPI for October also delivered a positive surprise, coming in at 0.3%, above the 0.2% forecast. Together, these figures suggest some resilience in the Eurozone’s inflation dynamics, a factor that could lend support to the euro.
EUR/USD traders await US retail sales data
Attention now shifts to US retail sales data, a critical indicator of consumer spending, which accounts for the bulk of economic activity. Analysts, including Goldman Sachs, expect October’s core retail sales to grow by 0.3%, matching the forecast. Headline retail sales are projected to rise by 0.4%, helped by strong auto sales but slightly weighed down by lower gasoline prices.
A stronger-than-expected retail sales print might renew pressure on the EUR/USD pair, while a softer outcome could bolster the euro’s recovery efforts.
The 1.0500 level remains a critical support level for EUR/USD bulls. A sustained break below this level could open the door to further losses, while holding above 1.0550 keeps the focus on potential upside. The upcoming US retail sales release will likely decide the pair’s next significant move.
The EUR/USD has faced notable pressure in November, posting a decline of over 3% so far. This downturn comes on the heels of key political and economic events.
