EUR/USD: Euro Tops $1.03 Ahead of December Inflation. What to Expect?

Volatility is expected to pick up Wednesday with the big consumer price report coming to shake up the forex scene.

📈 Euro Regains $1.03 Handle

• The EURUSD pair was calmly heading higher Wednesday morning after the euro managed to snatch the $1.03 handle from the US dollar. Currency traders rushed to offload the greenback (buoying the euro higher) after fresh inflation data showed some good momentum.
• Wholesale prices (PPI), or what producers charge, rose 0.2% in December, on a monthly basis, sliding below estimates of 0.4% and also under November’s 0.4% reading.

😨 Inflation Not That Scary?

• The report signaled that monthly price growth might actually be on a better trajectory despite brewing speculation that inflation is coming back. Still, for 2024, producer prices ran at 3.3%, a massive increase from the 1.1% clip in 2023.
• Against this backdrop, another big report looms today — CPI. Consumer prices are expected to show an increase of 2.9% in December, an uptick from November’s 2.7%. The CPI report is closely watched as it gives a more complete picture of price growth than the PPI.

⚖️ Euro Up from $1.0180

• Brace yourselves for volatility today as the data is about to stir the forex scene due to its heavy impact on the US dollar. A higher inflation reading suggests that the Federal Reserve might become more defensive in its stance toward interest rates.
• And vice versa — a price report under expectations might signal that the Fed’s campaign to cut interest rates is working, likely prompting officials to continue with their act. This week, the euro has climbed from a two-year low of $1.0180 (stoking talks of parity) to its current price around $1.03.