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The threat of deflation intensifies, as the Euro zone's inflation rate declined to 0.3% in November, down from 0.4% a month earlier. Eurostat said that consumer prices were dragged down by sharp declines of energy costs as a result of dramatic falls in oil markets. Consumer inflation has not been at the ECB's inflation goal of close to 2% since the beginning of 2013, and has been sliding since late 2011 when it reached 3%. Stripping out volatile components such as energy, food, alcohol and tobacco prices, inflation remained steady at 0.7%. Everything below the 1% threshold is considered by the ECB as the "danger zone", and the central bank may be forced to deploy more radical measures to combat deflation.
Meanwhile, the jobless rate in the 18-nation bloc remained stubbornly high at 11.5% for the third consecutive month in October. Eurostat's report showed that the number of people out of work rose by 60,000 to 18.395 million during the month under review. The highest jobless rate was recorded in Greece, where the reading stood at 25.9%. A separate report showed retail sales in Germany rose on both monthly and annual basis. Retail turnover increased 1.9% on month in October following a 2.8% decline in the previous month. A sharp increase in private consumption helped boost Germany's economic activity in the third quarter.
Tuesday's fundamentals to have insignificant impact on currency market
As suggested, the single currency will not be considerably influenced by fundamental data later on Tuesday. It seems the major events in both the Eurozone and United States will take place during the second part of the week. Concerning tomorrow, the Eurostat will release fresh data on producer price index in the currency bloc, while Spanish statistical authorities will announce unemployment change in the country in November. However, the overall importance of these events and subsequent influence on the EUR/USD pair is likely to be only minor.{ATTACHMENT}
EUR/USD to trade range bound during first week of December
The long-term outlook for the EUR/USD cross remains bearish, as the cross has been moving downwards since the beginning of July. For the time being the pair is trading within the boundaries between 1.24 and 1.25. However, any negative impetus will push the cross down to 2014 lows around 1.2360. From another side the Euro is limited by a long-term down-trend around 1.2540; therefore, the bearish scenario is most suitable for the pair at the moment.Daily chart
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From the perspective of hourly chart, it can be observed that the EUR/USD dropped in its value on Friday of the last week. The pair consolidated further below the 1.25 mark and reaches the weekly pivot point at 1.2447. At the moment the cross is hovering between this support line and the monthly pivot point at 1.2468. We assume the resistance to be rather strong in order to hold the pair's bulls from any upside movement. Therefore, it is likely that the single currency will depreciate to 1.24 in course of Monday.
Hourly chart
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