The European single currency remains well above support at 1.3500 ahead of the consumer price index data scheduled to be released today.  For the month of October, inflationary pressures are expected to match September’s 3% annualized pace.  Core prices are additionally anticipated to match previous month’s results, rising by 1.6%.

This is the highest pace of consumer prices this year, and should theoretically boost speculation that the European Central Bank will be more restrictive with interest rates at their next meeting.  But, given the region’s current financial situation and growing fears of slowing output and growth in the region, central bankers will likely remain accommodative with any future interest rate decisions.  This would place them in a similar situation with the Bank of England, who has passed on suggestions to increase interest rates even as inflationary pressures skyrocket in the economy.  Monetary Policy Committee members led by Governor Mervyn King have elected for further asset purchases as well toying with the idea of zero interest rate policy for the near future – in dealing with the UK economic downturn.

Source:  www.forexmarketshot.com

Earlier in November, European Central Bank policymakers led by President Mario Draghi cut interest rates by 25 basis points to 1.25%, effectively ending the rate hike campaign pushed by his predecessor Jean Claude Trichet.

Should the consumer price index show slower inflationary pressures, this would all but assure that another rate cut may be on the way early on in 2012 – similar to sentiment already being priced into the money markets.

Currently, the EURUSD is trading a bit higher above the aforementioned support at 1.3515 – circa the New York close.