Talking Points:

  • German CPI Confirmed at 1.0% y/y in March vs. in 1.2% in Feb
  • Euro Rose Against the US Dollar Following the Data Release
  • Further Gains May Be Ahead as the ECB Writes Off Deflation

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The release of the final revision of March’s German CPI gave enough fuel for EURUSD to reach 1.3900. The benchmark year-on-year inflation rate confirmed at 1.0 percent and is the lowest level since June 2010. The month-on-month change matched initial estimates at 0.3 percent. European Central Bank policy makers continue to write off deflation as a risk to the Eurozone. ECB President Draghi said earlier in March that the high exchange rate creates headwinds for the Eurozone. Unable to talk the Euro lower it appears that EURUSD is back on track towards 1.4000 that the ECB may begin to move bolstering bets on additional easing from the ECB. The following graph shows the benchmark year-on-year inflation rate in the Euro area.

Euro-Reaches-13900-German-CPI-Data-Prints-in-Line-Euro-Area-CPI-Remains-Low_body_Chart_2.png, Euro Reaches 1.3900, German CPI Data Prints in Line, Euro Area Inflation Remains Low

The Euro popped higher against the U.S. Dollar after the data before returning to familiar overnight ranges. The euro has advanced against the US Dollar for four consecutive days and it appears that the euro rally has room to continue to 1.3928 then 1.4000. As of yesterday retail sentiment data shows that a mere 20% of retail traders remain long suggesting a further bullish trading bias.

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Euro-Reaches-13900-German-CPI-Data-Prints-in-Line-Euro-Area-CPI-Remains-Low_body_Picture_1.png, Euro Reaches 1.3900, German CPI Data Prints in Line, Euro Area Inflation Remains Low

EURUSD 5-Minute Chart. April 11, 2014. Created using FXCM Marketscope 2.0.

-- Written by David Maycotte, DailyFX Research Team. Questions, comments or concerns can be sent to

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