Inflation continues to fall in the eurozone even after the year-over-year comparisons begin to back-out the commodity price boom of the summer of 2008. It was weaker than expected in France today and softer than expected in Germany yesterday. ZEW’s investor sentiment has begun to taper off as well, suggesting tougher sledding ahead for the economy in the months ahead. How does the EUR react? New highs, of course!
1.4842 and 1.4866 highs have been overcome and we are now in calm technical waters until the 1.52/1.53 area at long last. 1.5000 is expected to be a struggle with loads of barriers struck at that level.
The USD index has broken back below the 76.00 level and a close below that level will target an eventual retest of the summer 2008 lows at 71.50. 74.50-ish is support along the way.
