Despite a good increase in inflationary pressure, which was higher in the eurozone than economists' forecasts, the European currency continued to decline against the US dollar, under pressure after a series of weak fundamental statistics released during this week.
A number of experts note that the lack of demand for the euro, after the release of inflation data, was due to the fact that traders took into account the current inflation in quotations even before the publication of the report.
According to the data, annual inflation in the eurozone in April 2019 came even closer to the target level of 2%, which was set by the European Central Bank. The statistics agency report states that the eurozone's preliminary CPI in April rose 1.7% over the same period last year, after rising 1.4% in March. Economists had expected the index to grow by 1.5%.
Core inflation, which does not take into account volatile categories of goods, in the eurozone in April amounted to 1.2% against 0.8% in March.
Current data suggest that the European Central Bank is likely to refuse additional incentives during the June meeting.
However, it is necessary to note that the general inflation growth, as before, was due to the acceleration of energy prices, which is a very volatile indicator.
During his speech, President of the Central Bank of Germany Jens Weidmann said that the European Central Bank should not postpone returning to a more normal monetary policy. This must be done immediately when economic conditions permit. Weidmann is confident that the current slowdown in the German economy is temporary, focusing on some recovery in personal consumption.
A supporter of a tougher policy — the president of Germany's central bank — reiterated that extraordinary monetary stimulus measures cannot be applied every time economic growth slows down, as all this can lead to an increase in unjustified risks and negative side effects.
As for the technical picture of the EURUSD pair, the further downward movement will depend on the support level of 1.1150, the breakthrough of which will push risky assets further down to the area of 1.1110 and 1.1040.
The British pound fell slightly after the data on the index of purchasing managers for the services sector in the UK, which rose in April but was worse than economists' forecasts.
According to the data, despite the growth of activity in the UK services sector, the pace remains restrained. Thus, the index was 50.4 points in April against 48.9 points in March. Economists had expected the index to rise to 50.5 points.
The company IHS Markit noted that companies continue to report an increase in labor costs and a weakening of sales, while employment data for the reporting period remained almost unchanged.
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