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Belgium and Spain released their Harmonized Index of Consumer Prices (HICP) data, showing mixed inflation trends. Belgium's annual inflation eased to 3% in June from 4.1% in May, while Spain's inflation matched May's 3.6% despite a 0.6% monthly increase in prices. These releases precede the eurozone's HICP data due on Wednesday, which will be closely watched for clues on the European Central Bank's (ECB) policy trajectory.
The mixed inflation data adds uncertainty to the ECB's decision timeline. While lower inflation in Belgium could ease pressure for rate hikes, Spain's stable annual rate suggests persistent inflationary pressures. Traders are likely to assess how these divergent trends influence the ECB's stance, particularly ahead of the July meeting where policymakers might signal a pause in tightening.
For global markets, the eurozone's inflation trajectory remains a key driver of EUR/USD volatility. Traders should monitor the upcoming eurozone HICP release for clarity on the ECB's path. Additionally, the U.S. Federal Reserve's response to inflation data will shape the dollar's broader direction, creating cross-asset correlations worth tracking.
