Euro Area Consumer Price Index (CPI) Preview (AUG 2024)

Euro Area Consumer Price Index (CPI)

Euro Area inflation slowed in August, with the flash estimate for the Consumer Price Index (CPI) showing the headline reading narrowing to 2.2% from 2.6% per annum the month prior.

Euro Area Economic Calendar – August 30, 2024

FOREX.com Economic Calendar

The core rate also slipped to 2.8% from 2.9% during the same period, with the update from Eurostat revealing that ‘services is expected to have the highest annual rate in August (4.2%, compared with 4.0% in July), followed by food, alcohol & tobacco (2.4%, compared with 2.3% in July), non-energy industrial goods (0.4%, compared with 0.7% in July) and energy (-3.0%, compared with 1.2% in July).’

EUR/USD Chart – 15 Minute

Chart Prepared by David Song, Strategist; EUR/USD on TradingView

EUR/USD showed a limited reaction to the slowdown in Euro Area inflation but ended up extending the decline from earlier in the week to close at 1.10470. Nevertheless, EUR/USD recovered going into September, with exchange rate registering a weekly close of 1.1085.

Looking ahead, the headline reading for Euro Area inflation is seen narrowing to 2.0% in September from 2.2% the month prior, while the core CPI is expected to hold steady at 2.8%.

With that said, a downtick in both the headline and core CPI may drag on EUR/USD as it encourages the European Central Bank (ECB) to implement further rate-cuts in 2024, but signs of sticky price growth may generate a bullish reaction in the Euro as puts pressure on the Governing Council to further combat inflation. 

--- Written by David Song, Senior Strategist

Follow on Twitter at @DavidJSong