According to the initial release of CPI in the euro-zone, prices rose at an annual pace of 3% in September, much higher than 2.5% that was expected and the highest level in many years.
In his last rate decision, Jean-Claude Trichet will probably refrain from cutting the interest rate by 0.5% and perhaps he won’t cut the rates at all, despite the dire situation of the European economies.
EUR/USD reacted in a muted manner to this news as it was published together with the recent unemployment rate in Europe which remained at a high level of 10%, as expected. This is the flash estimate and it could be modified in the final release due only in two weeks time.
Earlier today, two consumer spending figures from France disappointed. 
The more worrying figure was a plunge of 2.9% in German retail sales, much lower than a drop of 0.5% that was expected. This shows that Europe’s largest economy is feeling the slowdown, and it joins many other similar figures.
Trichet has one needle in his compass
This phrase is repeated again and again by the president of the ECB. Headline inflation is the only concern of the central bank – its only mandate. If inflation is high, nothing else matters: not the reasons for inflation (external oil prices in too many cases) or the overall situation in the economy, which is quite sluggish.
The relatively high interest rate in Europe isn’t a such a magnet for the euro anymore. It curbs the very fragile growth and risks tipping the zone into recession. Perhaps it’s too late.
EUR/USD finally weakened against the greenback, after enjoying the big corrections related to the end of the month and the end of the quarter.
When the new month and quarter begin on Monday, will the euro plunge? Time will tell.
For technical lines and events, see the EUR/USD.