Now we're cooking
EURUSD has chalked up a high of 1.0947 after the core inflation number took a big leap. For those of you following my EURUSD long trade, you'll know I've been banging on about what would happen if the core number started playing catch up to the headline figure.
Now, as you'll also know by now, I won't start opening the party poppers just yet on one number but this jump should not be swept under the rug that quickly. Looking closer at the core chart you can see the scale of the move in greater detail.
Eurozone core CPI
I think Draghi gave a big hint yesterday at the ECB presser because he said that the ECB "Is seeing tentative signs of price pressures picking up", and said that "inflation is likely to pick up in April", the latter I noted as being a heads up.
The ECB are all about the second round effects of inflation and sustained inflation. Well, headline CPI has now risen 11 times out of the last 12 months, and now the core has jumped too.
EURUSD has run right into the recent resistance around 1.0950, and has parked itself just under at 1.0938. A break above here opens a lot of empty space for a push to 1.10.
EURUSD H4 chart
While we've got bagfuls of options going off between 1.0900 and 1.0950, that might keep the price in check for now, and I can see us sticking to a 1.0900-1.0930/40 range for now. A break of 1.0920 and then 1.0900 will alleviate this upward pressure.
There's going to be no chicken counting from me but we need to watch this number like a hawk (pardon the pun) now because if this is the start of a run higher, Draghi's on very limited time for talking dovish about the euro. My ECB preview was titled "Is this Draghi's last chance to talk down the euro?" and I guess we'll find out when we get May's inflation numbers ahead of the June ECB meeting.
