Inflation in the Euro zone rose more than expected in January but remained below the European Central Bank's inflationary target. On Tuesday, Eurostat reported consumer prices advanced 1.8% on an annual basis in January, the highest level since February 2013, following December's 1.1% and surpassing analysts' expectations of 1.5%. In the meantime, the core Consumer Price Index, which excludes volatile items such as energy prices, came in at 0.9% yearover-year in January, unchanged from December and in line with market forecasts. Nevertheless, the ECB President Mario Draghi said policymakers would look beyond energy prices and seek further signs of rising underlying inflation in order to change the course of the Bank's monetary policy. Tuesday's data showed energy prices climbed 8.1% on a yearly basis in January after rising 2.6% in the preceding month, whereas the price of unprocessed food rose 3.3% year-over-year.
Separately, Eurostat reported the Euro zone's economy advanced an annualized 2.0% on quarter in the three months to December 2016, while the US economy, the world's largest, grew at an annualized pace of 1.9% in the same period. Strong economic growth helped to lower the unemployment rate in the region, which dropped to 9.6% in December, the lowest level since May 2009.
Upcoming events: Mario Draghi and US Unemployment
During Thursday's trading session the EUR/USD currency exchange rate will be vulnerable to two fundamental events. First and almost sure to affect the Euro's strength will be the speech set to be given by Mario Draghi at 12:15 GMT. Later in the day a data release in the US is set to affect the financial markets, as the US Unemployment Claims will be published at 13:30 GMT.
Euro struggles on Thursday
Daily Chart: On Thursday morning the common European currency gained against the US Dollar, as the currency exchange rate approached the 1.08 mark. However, the Euro struggled to gain further gains, as it was being kept down by the 100-day SMA at 1.0792. It is highly unlikely that the pair will move upwards and score additional gains, as already at 1.0803 the long term pattern's upper trend line is located at. The trend line has kept the rate down for the past two trading sessions, initially stopping a jump of the Euro on Tuesday.Bearish sentiment decreases
SWFX traders remain bearish regarding the pair, as 56% of open positions are short on Thursday. Meanwhile, 56% of trader set up orders are to sell the Euro.
Spreads (avg,pip) / Trading volume / Volatility
Average forecast says EUR/USD will trade around 1.06 in May
Traders, who were questioned on their longer-term views on EUR/USD between January 2 and February 2 expect, on average, the currency pair to trade around 1.06 by the start of May. In general, 50% (-1%) of participants believe the exchange rate will be generally below 1.06 in ninety days, and 24% see it below 1.02. In the meantime, 17% (+1%) of those surveyed reckon the pair will trade above 1.12 in three months.