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17/05/24
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EUR Inches Down Despite Lower Inflation Report
On Friday the euro posted slight losses and EUR/USD traded at about 1.0837, 0.28% lower in the North American session.
The inflation report for April showed that headline inflation was steady at 2.4% y/y, staying at the lowest level in nearly 3 years. Energy prices and services inflation dropped, while tobacco, alcohol, and food prices were up slightly. Headline CPI eased from March’s 0.8% to 0.6% monthly and this matched the market consensus.
The most significant news was a drop in core CPI, which excludes food and energy, tobacco, and alcohol and is a more accurate measure of inflation trends. This rate dropped from March’s 2.9% to 2.7% y/y and the same as the market consensus.
Core CPI has now dropped 9 consecutive times and has declined to the lowest level since Feb. 2022. Earlier in the week, the European Commission said that it expected eurozone inflation to drop to 2.5% this year and decline to the 2% target in the second half of next year.
The ECB has done a great job curbing inflation, which was at 7% a year ago. The ECB has indicated that it was ready to move policy and cut rates at the June meeting.
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