EUR/USD, ECB News and Analysis
EU Unemployment Falls to Record Low While Eurozone PPI up 30.6% YoY
Unemployment in the Eurozone dropped more than expected as it reached 6.8%. The labor market has strengthened for some time now and prints well below the historical average which is around 9%. Much of the labor market strength can be attributed to the ECB’s ultra-loose monetary policy via sub-zero interest rates and by providing economic stimulus via the Pandemic Emergency Purchas Program (PEPP).
However, rampant inflation has ensued, mainly due to soaring energy prices, which has shown up in the latest PMI data. Producer prices are up year on year by 30.6%, and 5.2% (double the estimate) month on month. Oil[2] and gas prices rose 11.6% for the month and a whopping 85.6% over the year ending January 2022.
The ECB now has to contend with rising inflation amidst potentially negative economic impacts of the Ukraine crisis, particularly due to the fact that Russia supplies a sizeable amount of gas to the single market.
EU Industrial Producer Prices (PPI)
Source: EUROSTAT
EUR/USD Key Technical Considerations
EUR[3]/USD[4] has declined steadily ever since the post ECB meeting at the end of January which the markets viewed as rather hawkish. The steady drop gained pace over the last three sessions as expectations around a possible rate hike in 2022 was revised downwards. Previously we saw expectations of around 40 basis points with of hiking but currently only 27 bps expected before year end.
Yesterday the pair broke below the
