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EUR/USD Slips as Latest Euro-Zone Inflation Data Stays ECB Hand

EUR/USD Slips as Latest Euro-Zone Inflation Data Stays ECB Hand

Nick Cawley, Strategist

Talking Points

- EURUSD slipped lower after Euro-Zone inflation missed expectations.

- Release will strengthen ECB President Mario Draghi’s resolve to continue with his ultra-loose monetary policy.

- See the DailyFX Economic Calendar and see what live coverage for key event risk impacting FX markets is scheduled for next week on the DailyFX Webinar Calendar.

Euro-Zone inflation in March fell to 1.5% y-o-y from 2.0% in February and missed expectations of a 1.8% increase. On a monthly basis, CPI rose 0.7% against a prior month’s reading of 0.9% as energy and food prices moderated. While this decrease was partially priced into the market after Thursday’s inflation figures out of Germany, the single currency edged lower as the y-o-y fall eased the pressure on ECB President Mario Draghi.

The recent ‘hawkish’ talk floating around the market, including tapering and raising rates before the bond-buying program expires, had given the single currency a leg-up to a four-and-a-half-month high, albeit from a low base. President Draghi will be able to point to this month’s inflation reading as a confirmation of his monetary policy at the next council meeting on April 27.

Chart: EURUSD Daily Timeframe (December 2, 2016 – March 31, 2017)

EUR/USD Slips as Latest Euro-Zone Inflation Data Stays ECB Hand

Chart by IG

--- Written by Nick Cawley, Analyst

To contact Nick, email him at nicholas.cawley@ig.com

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