New lows in EURUSD. Overview for 12.05.2022

EURUSD hit another multi-month bottom while investors are trying to escape risks.

The major currency pair is back to falling. The current quote for the instrument is 1.0429.

Earlier today, the Euro hit the bottom of March of 2020 and it might be only the beginning. Market players are escaping risks when each new sale causes another wave of panic. The ECB’s monetary policy is far behind the Fed’s stance – it doesn’t surprise anybody but this factor continues working against the Euro. 

Geopolitical escalations and inflation boost might force the ECB to raise the rate during its July meeting. However, it’s just an assumption but not a fact of life. 

The CPI data released by the US yesterday was rather unusual. The indicator showed 0.3% m/m in April against the expected reading of 0.2% m/m. However, on YoY, it slowed down a bit and showed 8.3% after being 8.5% in March. Should it be considered a positive signal? Very unlikely. First of all, the Core CPI remains high. Secondly, the effect of the increased interest rates will appear only in a couple of months – no one should draw any conclusions about the regulator’s policy efficiency before that. It’s highly likely that the current slowdown is just a pause in the inflation rally. 

The Core inflation, by the way, showed 0.6% m/m and 6.2% y/y in April – both readings are higher than expected.

Later today, market players should pay attention to the weekly Unemployment Claims report to be published by the US. However, their major focus will turn to emotional fluctuations in EURUSD.

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Source: RoboForex


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