Eurozone Inflation Meets Expectations

📊 Eurozone Preliminary HICP Inflation Rises to 2.2% YoY in September, as Expected

The Eurozone Harmonized Index of Consumer Prices (HICP) rose at an annual rate of 2.2% in September, up from 2.0% in August, according to official data released by Eurostat on Wednesday.

Markets had forecast a 2.2% print, and the actual figure matched expectations.

Core HICP also increased 2.3% YoY, unchanged from August and in line with projections. On a monthly basis, both headline and core inflation rose 0.1%, indicating stable price pressures across the bloc.

🔎 Breakdown of Eurozone Inflation Components

According to Eurostat, the main contributors to September’s inflation were:

• Services: 3.2% (vs. 3.1% in August)
• Food, Alcohol & Tobacco: 3.0% (vs. 3.2%)
• Non-Energy Industrial Goods: 0.8% (unchanged)
• Energy: -0.4% (vs. -2.0%)

The European Central Bank (ECB) targets a 2.0% inflation rate. These figures, especially the persistent core inflation, could influence future ECB interest rate decisions.

📈 EUR/USD Reaction and Broader Market Context

Following the release, the Euro held moderate gains, with EUR/USD rising 0.15% to trade near 1.1750.

The pair continues to benefit from broad-based weakness in the United States Dollar, which remains under pressure due to soft labor market data and growing expectations of rate cuts by the Federal Reserve.

• The latest US JOLTS report showed job openings at 7.22 million, slightly above expectations, but hiring slowed.
• The ADP Employment Change and ISM Manufacturing PMI reports are due later today, though their release may be affected by the United States government shutdown, which began earlier this week after a failed Senate vote on the funding bill.

🇩🇪 German CPI Adds to Euro Strength

On Tuesday, Germany’s Harmonized Index of Consumer Prices rose 0.2% MoM, lifting the annual rate to 2.4%, up from 2.1% in August. This stronger-than-expected reading added momentum to the Euro ahead of the bloc-wide inflation release.

📊 Technical Outlook: EUR/USD Eyes 1.1918

Technically, EUR/USD is trading near 1.1780, extending its winning streak for the fourth consecutive session.

• The 14-day RSI is above 50, indicating bullish momentum.
• A break above 1.1790 could open the path toward 1.1918, the highest level since June 2021.

Key support levels include:

• 9-day EMA: 1.1743
• 50-day EMA: 1.1688
• Two-month low: 1.1608