The preliminary harmonized index of consumer prices (HICP) for the euro area in May was reported at 3.2% year-on-year, up from April’s 3%. Core HICP—excluding volatile items like food, energy, alcohol, and tobacco—hit 2.5%, surpassing expectations of 2.4% and last month’s 2.2%. Month-over-month, both the headline and core HICP increased slightly by 0.1% and 0.3%, respectively.
The euro (EUR) seems to have responded unfavorably to the May inflation data from the Eurozone, which showed an annual uptick but a notable monthly slowdown. As of now, the EUR/USD exchange rate has dipped to approximately 1.1640, although it’s still a bit above Monday’s close of 1.1631.
What does the high euro area core HICP data mean for the euro?
Inflation in the euro area was anticipated to rise, mainly due to ongoing high energy prices affected by restrictions on energy flow in the Strait of Hormuz. Yet, the better-than-expected core inflation figures might bolster expectations that the European Central Bank (ECB) will hike interest rates at next week’s policy meeting.
Generally, expectations of rate increases by the ECB are seen as positive for the euro.
Various ECB officials have noted the necessity to tighten monetary policy in the short term to contain rising inflation expectations.
Technical analysis: EUR/USD remains flat
Currently, EUR/USD is trading just above 1.1641. The short-term outlook seems slightly bearish as upward movement is hindered by the 20-day exponential moving average (EMA) at 1.1656.
The Relative Strength Index (RSI) stands at 46.7, sitting just below the neutral 50 mark, which indicates a lack of strong upward momentum and hints at a corrective trend rather than a robust one.
For near-term resistance, the focus is on the 20-day EMA at 1.1656. A daily close above this level could relieve some downside pressure and create potential for a more significant recovery towards the May 29 peak of 1.1685. Conversely, if the pair breaks below the May 21 low of 1.1576, it could slide down to around 1.1500, breaking out of a near three-week consolidation period.
Economic indicators
Core Harmonized Index of Consumer Prices (YoY)
The Harmonized Core Index of Consumer Prices (HICP) tracks changes in prices of a basket of goods and services in the Eurozone. Adjustments occur monthly, ensuring all member states adhere to the same methods. Year-on-Year comparisons look at the current prices vs. those from a year prior. The core HICP, which excludes volatile categories, is critical for measuring inflation and shifts in spending patterns. Typically, higher figures are bullish for the euro, while lower figures are bearish.
Final release: Tuesday, June 2, 2026 09:00 (Prel)
Frequency: Monthly
Actual: 2.5%
Consensus: 2.4%
Previous: 2.2%
