Release Explanation: CPI measures the average price of a fixed market basket of goods and services purchased by consumers, and therefore give an overall read of Inflationary pressures. It is the most widely used Inflation indicator of Central Banks, Institutions, and Governments. It is used to calculate Cost of Living numbers for Government programs. “Each regional Central Bank will have their own CPI Target rate, and each will differ in line with the way they individually want to control the aspects of their own economies,” Trade Team said. Trade Desk Thoughts: Euro-area April inflation, as measured by the Flash estimate, is expected to remain at 0.6%. Over the last few months, the inflation gauge has dropped sharply, reflecting tougher credit conditions and the rather huge declines in the commodity markets. However, the CPI Flash Estimate does not provide a detailed breakdown of the sub-indexes. 

“Currently, estimates are that the CPI read is heading even lower. European officials have said a number of times that they do not expect to see deflation in the Euro-area, but do expect very low reads, even negative ones,” Trade Team said. 

Forex Technical Reaction: The euro rose sharply during the London session, but the pair peaked near the 1.3380 resistance area. Against the pound, the euro lost 30 pips.