The Euro slips as Europe's biggest economies report hotter inflation

Europe's dominant economies reported inflation rates exceeding expectations in September, resulting in the Euro slipping lower against the US Dollar. Spain's inflation rate peaked at 5%, the highest since 2023, contributing to the decline. The source material indicates that energy prices, primarily driven by the US-Iran conflict, are a major factor behind the inflation surge, leaving households with less disposable income.

The European Central Bank (ECB) raised its deposit rate to 2.50% on September 10, with a decision due on October 29, following the Federal Reserve's meeting. ECB Executive Board member Schnabel, nearing retirement, suggested that rising global yields could ease price pressures and allow inflation to align with the ECB's 2% target more slowly.

Despite this, EUR/USD closed below 1.1350 for the second consecutive session. The next key economic data points to watch are the flash Harmonised Index of Consumer Prices (HICP) for September, released on Friday at 09:00 GMT, with a forecast of 3.6% year-over-year, and the core rate at 2.5%, down from 2.4%. Additionally, the US payroll count, scheduled for Friday at 12:30 GMT, and the ECB President Lagarde's speech on Thursday at 13:30 GMT, could further influence the currency.

Notably, the 1.1400 resistance level has previously halted rebounds since September 23, while the 1.1450 target lies beyond it. Conversely, the 1.1300 support level represents the lowest since May 2025, with the 1.1250 level sitting below it. Technical analysis suggests that a daily close surpassing 1.1450 could signal a potential break of the current downtrend.