On Wednesday, Euro fell on Forex against the US Dollar to the support level of 1.2075.
The US currency rose after the publication of data showing that US inflation accelerated more than expected in April. US consumer prices rose at their fastest pace since 2009 in April. The increase compared to the same period last year was 4.2% on the back of a record increase in used car costs. The consensus forecast of economists implied an increase of 3.6%. The index gained 2.6% last month. Core inflation, which excludes volatile food and energy prices, rose 3% year-on-year and also significantly exceeded expectations.
Fed Vice Chairman Richard Clarida downplayed the importance of strong inflation growth and said that this is a temporary jump due to the effect of the low base of April 2020. The current price levels are higher than they were a year ago, when the economy was almost at a standstill. Clarida noted that the annual inflation rate will increase slightly before the decline at the end of this year. According to the official, the Fed is still far from reducing large-scale economic stimulus.
The central bank expects that inflation will return to the long-term goal of 2% in 2022 and 2023, and even slightly exceed it.
Signals for trading EUR/USD currency pair
The forecast assumes a decline in the Euro/Dollar exchange rate to the levels of 1.2050, 1.2025 and 1.2000.