Inflation is lifting its head, mostly due to oil prices. Year over year, prices are up 1.7% in both in the national measure as well as the HICP. Month over month, CPI is up 0.7% in the national figure and 1% in the HICP. All the figures are above expectations.

The stronger than expected inflation figures do not cheer up the euro. The dollar resumed its rises early in 2017 and the common currency surrenders to this strength. Better than predicted employment figures from the continent’s largest economy haven’t helped too much either.

Support awaits at 1.0350, the low of 2016. Resistance is at 1.0460.

Inflation is oil related

Germany was expected to report a monthly gain of 0.6% in the headline consumer price index. This is relevant to both the national figure that rose 0.1% in November as well as the European Standard HICP that remained unchanged.

Year over year, the national figure carried expectations for nearly doubling from 0.8% to 1.5%. The HICP was projected to rise from 0.6% to 1.3%.

EUR/USD tumbled down, trading at 1.0390 just before the publication.

The expected leap in prices is fully related to the diminishing effect of falling oil prices. The price of black gold was lower back in January 2016, which was the trough under $30. And now, after the OPEC agreement, prices are higher, trading around $55 in WTI Crude Oil. However, a barrel cost over $100 back in 2014 and 2013.

Earlier, Spain’s inflation measure also jumped, while France’s figure fell short of expectations. Tomorrow we will get the all-European figure. Undoubtedly, the headline figure will jump. On the other hand, core inflation is stuck at 0.8% for many months.

More: EUR/USD has a limited window to achieve parity