The Euro (EUR) moved higher against the US Dollar (USD) on Monday, with EUR/USD trading around 1.1740, up 0.3% on the session. Investors are awaiting the release of preliminary German inflation figures for September, due Tuesday at 12:00 GMT, which could influence European Central Bank (ECB) policy expectations.
German inflation forecasts
The consensus anticipates the Consumer Price Index (CPI) rising 2.3% YoY in September, up from 2.2% in August, while the Harmonized Consumer Price Index (HCPI) is expected to increase 2.2% YoY, following 2.1% previously. On a monthly basis, both indices are projected to rise 0.1%, unchanged from August.
These figures will provide insight into the persistence of inflationary pressures in Germany, the Eurozone’s largest economy, and may set the tone for the Euro in the near term.
Inflation Drivers: food prices and services
August data showed annual inflation at 2.2%, the highest in five months, driven largely by higher food prices: fruit (+7.1%), sugar and sweets (+6.9%), and dairy (+3.2%). Energy price declines slowed to -2.4% from -3.4% in July.
Services inflation remained robust at 3.1%, supported by passenger transport (+11.1%) and social services (+8.1%). Core inflation, excluding energy and food, held steady at 2.7% for the third month, indicating that disinflation remains incomplete. Monthly consumer prices rose 0.1%, confirming a slow but steady upward trend.
Technical analysis: EUR/USD faces key levels
EUR/USD has rebounded after bottoming at 1.1645 last week, rising toward 1.1745. The pair is currently testing the 100-period Simple Moving Average (SMA) on the 4-hour chart at 1.1751.
A break above this level could lead to testing intersecting trend lines near 1.1777, potentially resuming the short-term uptrend toward peaks at 1.1820, 1.1878, and the recent high at 1.1918. Conversely, failure below the SMA and trend lines may reignite bearish momentum, with last week’s low at 1.1645 in focus.
