EUR/USD falls to 5-week low as inflation eases

  • Eurozone inflation falls sharply
  • Debt ceiling deal sails through House of Representatives
  • JOLTS Job Openings beats expectations

The euro has edged higher on Thursday, trading at 1.0708, up 0.19%. The currency remains under pressure as the US dollar is flexing some muscles. On Wednesday, EUR/USD touched a low of 1.0635, its lowest level since March 20.

Will ECB pause as inflation falls?

There are clear signs of disinflation in the eurozone, as rising interest rates have dampened economic activity. Spain and France reported sharp drops in inflation in April, and Germany has followed suit, with inflation dropping from 7.6% in April to 6.3% in May. This was lower than the consensus of 6.8%. In the eurozone, inflation fell from 7% to 6.1%, below the consensus of 6.3%. Inflation has eased as energy prices have fallen sharply, with food prices also dropping.

Most importantly, eurozone core inflation fell to 5.3%, down from 5.6% and below the consensus of 5.5%. The ECB is focussed on the core rate, which excludes energy and food prices. The drop in the core inflation in April will add support for the ECB to take a pause in rate hikes, as early as the July meeting.

Debt ceiling deal sails through the House

The US House of Representatives approved the debt ceiling deal on Wednesday. The measure sailed through, by a vote of 314-117. The Senate is expected to vote on the bill later this week, with the government forecast to hit the debt ceiling by June 5th.

On the employment front, JOLTS Job Openings rose to 10.1 million, above the upwardly revised prior reading of 9.7 million and the consensus of 9.4 million. This is another indication that the labour market remains very strong and if the nonfarm payrolls release on Friday is solid, the Fed may have to continue raising rates. Fed members are divided on whether to pause or hike at the June 14th meeting, and Fed swap futures are pricing in a 67% chance of a 0.25% hike at the meeting.


EUR/USD Technical

  • There is resistance at 1.0753 and 1.0804
  • 1.0675 and 1.0624 are providing support

Content is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Business Information & Services, Inc. or any of its affiliates, subsidiaries, officers or directors. If you would like to reproduce or redistribute any of the content found on MarketPulse, an award winning forex, commodities and global indices analysis and news site service produced by OANDA Business Information & Services, Inc., please access the RSS feed or contact us at Visit to find out more about the beat of the global markets. © 2023 OANDA Business Information & Services Inc.

Kenny Fisher

Kenny Fisher

Market Analyst at OANDA
A highly experienced financial market analyst with a focus on fundamental analysis, Kenneth Fisher’s daily commentary covers a broad range of markets including forex, equities and commodities. His work has been published in several major online financial publications including, Seeking Alpha and FXStreet. Based in Israel, Kenny has been a MarketPulse contributor since 2012.
Kenny Fisher

Latest posts by Kenny Fisher (see all)