The release of data yesterday showed that inflation in Germany has decreased more than expected in November by 2.3%. In addition, the "core inflation" data also decreased by 3.8% compared to 4.3% in October 2023.
The reading of the latest inflation trend is able to trigger speculation that the European Central Bank (ECB) will cut interest rates next year.
Even so, ECB councilor Yannis Stournaras spoke yesterday and warned that the country's central bank is still far from cutting interest rates, while seeing the possibility of an interest rate hike by the European central bank still remains open.
American dollars
The market currently sees that the Fed tends to cut interest rates in early March 2024. At the same time, it puts pressure on the dollar index.
The inflation data component in the US will be a new indicator of the certainty of market expectations for interest rate cuts.
"Personal Consumption Expenditures" will be published tonight where the expected production data is seen to decrease by 0.1% compared to the previous 0.4% data.
Technical Analysis
If tonight's American inflation data component gives a signal that inflation is still on hold, investors may see EUR/USD looking for the $1.0900 price level and if this price area is successfully broken, $1.0860 will be the price floor for investors.
But if the opposite happens, bullish momentum can be seen up to the price level of $1.100 - $1.1150.
