Euro punches above 1.10, German CPI next

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<li>Euro rally continues</li>
<li>German inflation expected to fall to 3.5%</li>
<li>US Conference Board Consumer Confidence index accelerates</li>
</ul>
<p>The euro continues to rally in Tuesday trading. In the North American session, EUR/USD is trading at 1.0998, up 0.41%. Earlier, the euro climbed as high as 1.1002, the first time the 1.10 line has been breached since August 11. The euro has looked sharp, gaining 3% since November 10.</p>
<p><strong>German inflation expected to ease</strong></p>
<p>Gerrmany’s inflation rate continues to head lower, which must be music to the ears of Christine Lagarde and her colleagues at the ECB. Inflation eased to 3.8% y/y in October, down sharply from 4.5% in September. This marked the lowest reading in over two years, driven by declines in food and energy prices. The downtrend is expected to continue on Wednesday, with the November print expected at 3.5%. Core inflation is running at a faster clip than the headline figure but is also expected to decline in the November release.</p>
<p>The ECB has raised the cash rate to 4.0% but has signalled a “higher for longer” policy for the next several quarters. The central bank doesn’t want to jump the gun and hint at rate hikes so long as inflation remains well above the 2% target. The markets, however, are more dovish and have priced in a rate cut as early as May. ECB President Lagarde didn’t provide any insights in her comments on Monday and merely reiterated that rates would remain “sufficiently restrictive” for as long as necessary.</p>
<p>In the US, the Conference Board Consumer Confidence index came in at 102 in November, above the revised October reading of 99.1 and higher than the market consensus of 101.0. We’ll also hear from a host of Fed members during the day, which could provide some insights into the Fed’s plans for the December meeting.</p>
<p>.</p>
<p><strong>EUR/USD Technical</strong></p>
<ul>
<li>EUR/USD is testing resistance at 1.0986. Above, there is resistance at 1.1033</li>
<li>1.0920 and 1.0873 are providing support</li>
</ul>
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