EUR/USD moves up from 1.1180 to touch a session high of 1.1195 briefly
The notable beat in the headline reading in the Saxony report is one of the more obvious signs but the other readings seen in Spain and France also show improvement relative to their March readings as well. However, the more crucial part in all of this for me lies in the details of the Saxony report.
It showed that core inflation in the state rose from +1.1% y/y in March to +1.7% y/y in April. While it isn't a confirmed assessment of a bounce in inflationary pressures in the Eurozone, it often provides a bellwether for what to expect ahead of the overall release on Friday.
The only issue I have to pick on the inflation readings here is that it could be distorted by Easter seasonality. Easter falls in late April this year so a lot of the obvious factors like airfares, package holidays, restaurants & hotels prices could be boosted during the month because of that (only a temporary boost in fact).
We'll have more of an idea in the coming months but take nothing away from the release here for now. It's a positive reading for inflation and there is no doubt the ECB will cling on to whatever it can wrap its hands around at this point.
As for EUR/USD, the pair bounced slightly to a high of 1.1195 but is still struggling to break near-term resistance at 1.1193. Further offers and resistance is seen closer to 1.1200 and that continues to be the key line in the sand that buyers will have to break above in order to justify an extension higher from here.
