EUR/USD Declines on News ECB will Cut Inflation Forecasts

Frankfort (June 7)  Bloomberg is reporting today at the European Central Bank is preparing to cut its inflation forecast at tomorrow’s policy meeting due to weaker energy prices. The news is attributed to euro-area officials familiar with the matter.

According to Bloomberg, “ECB’s draft projections now show consumer-price growth at roughly 1.5% each year in 2017, 2018 and 2019. The previous projections in March showed rates of 1.7%, 1.6% and 1.7%, respectively.” The numbers, however, will not be final until they are published on Thursday and a spokesman for the ECB declined to comment.

The news caused EUR/USD to tumble from the 1.1270 level to a current session low at 1.1204. The sell-off has broken first support at Monday’s 1.1234 low, which represented a test of the mid-point of last Friday’s open/close range as well as a test of the high established on May 26th.

However, technical damage has thus far been muted. A sustained break below the 1.1800 is required to void the broader positive outlook for the pair as well as the current upside target, which stands at the 1.1650 level.

Source: EconomicCalendar