U.S. inflation slowed to its lowest level since 2021 in June, with a long-awaited slowdown in home prices growth. It was the strongest signal that the Federal Reserve may soon cut interest rates.
The core consumer price index, which excludes food and energy costs, rose 0.1% from the May reading, the weakest increase in three years.
Home prices, the largest service category, rose 0.2%, the weakest increase since August 2021. Home rents – also the largest single component of the CPI – rose 0.3%, also the lowest in three years.
In addition to slower growth in rents, spending on other services such as airline tickets, hotel stays, and inpatient hospital care fell from the previous month. New and used car prices led to a broader decline in the core goods basket.
Treasuries rallied after the CPI report and traders have all but priced in September and December rate cuts, adding to the EURUSD’s strength.
Separate jobs data yesterday showed that the number of Americans filing for unemployment benefits rose to its highest level since late 2021. At the same time, initial jobless claims fell by 17,000 last week, the biggest drop in a year.
The overall recommendation is to buy EURUSD 1.0850 in the medium term.
Profit could be taken at 1.0950. A stop loss could be set at 1.0760.
The value of a possible loss should not exceed 2% of your deposit funds.
