When is the Eurozone Prelim HICP inflation and how could it affect EUR/USD?
The Eurozone Prelim HICP Overview
Eurostat will publish the preliminary Eurozone Harmonized Index of Consumer Prices (HICP) data for January later on Wednesday at 10:00 GMT.
Eurozone HICP inflation is expected to ease to 1.7% year-over-year (YoY) in January, from 1.9% in December. Meanwhile, the annual core inflation is anticipated to remain consistent at 2.3% in the reported month.
The monthly Eurozone inflation and core inflation were at 0.2% and 0.3%, respectively, in December.
How could the Eurozone Prelim HICP affect EUR/USD?
The EUR/USD pair may remain steady if the HICP data come as expected. Traders are awaiting the European Central Bank’s (ECB) interest rate decision due on Thursday. The ECB is widely expected to leave key rates unchanged at its February policy meeting, extending the pause to a fifth consecutive meeting.
Attention will turn to the ECB press conference for signals on the rate outlook. Swedbank economist Nerijus Maciulis said ECB President Christine Lagarde is likely to stress that the euro-area economy remains resilient, although risks stay elevated. He added that early 2026 has highlighted the fragility of trade deals and agreements.
Later on Wednesday, traders will focus on the Institute for Supply Management’s (ISM) Services PMI, expected to ease to 53.5 in January from 54.4 previously. Meanwhile, the Bureau of Labor Statistics (BLS) will not release the January employment report on Friday as scheduled due to the partial government shutdown that began last weekend.
Technically, the EUR/USD pair extends its gains for the second successive session, trading around 1.1830 at the time of writing. Technical analysis of the daily chart indicates a bullish bias; the 14-day Relative Strength Index (RSI) at 55 confirms strong momentum.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
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