Buying EURUSD if consumer price indices in eurozone countries show growth

The European Central Bank lowered interest rates yesterday for the third time this year, declaring that inflation in the eurozone is getting more and more under control.

The first consecutive rate cut in 13 years marks a shift in the eurozone regulator's focus from reducing inflation to protecting economic growth, which has lagged well behind the US economy for two successive years.

Prices rose just 1.7% last month, falling below the 2% target for the first time in three years. While inflation may slightly exceed the ECB's target by the end of this year, it is expected to hover around that level for the foreseeable future.

As it was noted by ECB President Christine Lagarde, the regulator's officials believe that the disinflation process is proceeding as planned, and all the information they have received over the last five weeks points to the same downward direction.

Lagarde gave no hints about any future moves, but sources close to the ECB said a fourth cut is likely to take place in December if economic and inflation data support such a move.

Money markets are almost entirely pricing in three more cuts being delivered before March next year.

Downside risks to economic growth amid easing inflationary pressures will lead to further rate cuts starting in December and continuing into 2025 until interest rates return to neutral levels, which the ECB itself estimates at 2%.

Since the market participants already consider the further policy easing steps by ECB an inevitable fact, taken into account in the EURUSD quotes, any data disproving the slowdown of inflation in the Eurozone can give a major short-term momentum for EURUSD strengthening.

In the coming two weeks, CPI data sets of the leading Eurozone economies such as Germany, France, and Italy will be published. If the actual CPI values exceed the forecast expectations, it will provide a boost to EURUSD strengthening.

The final recommendation is to buy EURUSD in case the CPIs of the Eurozone countries exceed the forecast estimates.

The profit is taken at the level of 1.1000. The loss is fixed at the level of 1.0700.

The volume of the opened position should be set in such a way that the value of the possible loss, fixed with the help of a protective stop order, is no more than 2% of the deposit funds.