Eurozone flash headline HICP rises at a faster pace of 1.9% in February
Annual Harmonized Index of Consumer Prices (HICP) in the Eurozone, as measured by changes in the prices of a representative basket of goods and services in the European Monetary Union, rises at a faster pace of 1.9% in February, against estimates and the previous reading of 1.7%. On month, headline inflation stood at 0.7% after prices declined by 0.6% in January.
Also, the Eurozone's annual core HICP – which excludes volatile components like food, energy, alcohol, and tobacco – grows at a faster pace of 2.4% vs. estimates and the prior release of 2.2%. Month-on-month core HICP rises sharply by 0.8%.
Market reaction
There seems to be a positive impact of the higher-than-expected Eurozone HICP data on the Euro (EUR) against riskier currencies, while it is significantly down against safe-haven peers. As of writing, EUR/USD trades 0.7% lower to near 1.1600.
(This story was corrected on March 3 at 10:40 GMT to say that Eurozone inflation stood at 0.7% MoM in February, not 1.7%.)
Euro Price Today
The table below shows the percentage change of Euro (EUR) against listed major currencies today. Euro was the weakest against the US Dollar.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.69% | 0.72% | 0.20% | 0.15% | 0.63% | 0.90% | 0.83% | |
| EUR | -0.69% | 0.03% | -0.49% | -0.53% | -0.06% | 0.21% | 0.14% | |
| GBP | -0.72% | -0.03% | -0.52% | -0.55% | -0.08% | 0.18% | 0.11% | |
| JPY | -0.20% | 0.49% | 0.52% | -0.02% | 0.45% | 0.70% | 0.64% | |
| CAD | -0.15% | 0.53% | 0.55% | 0.02% | 0.47% | 0.74% | 0.67% | |
| AUD | -0.63% | 0.06% | 0.08% | -0.45% | -0.47% | 0.26% | 0.17% | |
| NZD | -0.90% | -0.21% | -0.18% | -0.70% | -0.74% | -0.26% | -0.07% | |
| CHF | -0.83% | -0.14% | -0.11% | -0.64% | -0.67% | -0.17% | 0.07% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the Euro from the left column and move along the horizontal line to the US Dollar, the percentage change displayed in the box will represent EUR (base)/USD (quote).
(This section below was published at 07:29 GMT as a preview of the Eurozone flash HICP data for February)
Eurozone flash HICP Overview
The Eurozone preliminary Harmonized Index of Consumer Prices (HICP) data for February is scheduled to be published today at 10:00 GMT.
According to preliminary estimates, Eurostat will show that both the headline and core HICP – which excludes volatile components like food, energy, alcohol, and tobacco – grew at a steady pace of 1.7% and 2.2% Year-on-Year (YoY), respectively.
The Eurozone headline HICP has cooled down in the last two months from 2.1% YoY in November. Therefore, signs of further slowdown in the HICP growth rate could prompt dovish European Central Bank (ECB) expectations. On the contrary, higher-than-expected figures are unlikely to bring a dramatic change in the ECB's monetary policy expectations.
ECB President Christine Lagarde said in her statement before the Committee on Economic and Monetary Affairs (ECON) of the European Parliament on February 26 that she is confident about inflation stabilizing at the central bank’s 2% target in the medium term and retained a data-dependent approach. Lagarde said, “I am really convinced that we should maintain data dependent approach.”
How could Eurozone inflation data affect EUR/USD?
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EUR/USD trades 0.2% lower at around 1.1667 ahead of the Eurozone inflation data release. The near-term bias is bearish as the pair trades below the 20-day Exponential Moving Average (EMA, which is near 1.1788.
The 14-day Relative Strength Index (RSI) sliding below 40.00 signals the onset of bearish momentum, pointing to room for further downside extension before selling pressure becomes exhausted.
Initial support stands at the rising support trend line around 1.1640 that had guided the advance from 1.1468. The scenario of a trend-line break would expose the price to a deeper pullback toward 1.1600. On the upside, immediate resistance emerges at the February 19 low of 1.1742, followed by the 20-day EMA around 1.1788. A further break above the average would strengthen the odds of further upside toward 1.1820
(The technical analysis of this story was written with the help of an AI tool.)
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
Author
Sagar Dua
FXStreet
Sagar Dua is associated with the financial markets from his college days. Along with pursuing post-graduation in Commerce in 2014, he started his markets training with chart analysis.
