The Euro Holds Steady Despite Eurozone Inflation Slowing Further
EUR/USD has been going through a steep bearish since early March but it's retracing higher today despite softer CPI
EUR/USD has been going through a steep bearish since early March, which is shown by the 50 SMA acting as resistance, pushing the price below 1.08 last week. But today we had the CPI inflation numbers from the Eurozone which slowed more than expected, however the Euro has been holding steady and it even jumped 40 pips higher now after the US SUm services which came weaker than expected.
EUR/USD Chart H4 – Pushing Above 1.08
The Eurozone Consumer Price Index (CPI) Year-over-Year (Y/Y) was projected to remain steady at 2.6% in March, unchanged from the previous month’s figure of 2.6%. However, the Core CPI Y/Y measure was expected to decrease slightly to 3.0% from the previous reading of 3.1%. These projections suggest moderate inflationary pressures within the Eurozone, with core inflation showing a slight decline.
Given the market’s anticipation of the first rate cut by the European Central Bank (ECB) in June, significant deviations from these CPI forecasts would be required to prompt market pricing in an April move. Recent data releases, including a miss in the French CPI readings and lackluster CPI inflation statistics from Germany, contributed to lower expectations for today’s Eurozone CPI release.
In addition to the CPI data, we also got the Eurozone Unemployment Rate was expected to remain unchanged at 6.4%. At least, a sustained low unemployment rate indicates underlying stability in the Eurozone labor market, which could potentially support consumer spending and economic growth in the coming months, but for now the picture remains dire.
Eurozone March CPI Inflation
- CPI Flash Year-over-Year (YoY): 2.4%, lower than the expected 2.6%.
- CPI Flash Excluding Food & Energy (F&E) YoY: 3.1%, slightly lower than the expected 3.2%.
- CPI Flash Excluding Food, Energy, Alcohol & Tobacco (F, E, A & T) YoY: 2.9%, also slightly lower than the expected 3.0%.
- CPI Flash Excluding Food, Energy, Alcohol & Tobacco Month-over-Month (MoM): 1.1%, higher than the expected 0.7%.
The CPI data for the Eurozone, while slightly lower than expectations, is not expected to significantly alter market predictions regarding the European Central Bank (ECB) rate decisions. As you mentioned, a hold for April is already largely priced in, with an 80% probability according to market expectations.
Additionally, the probability of a rate cut in June is set at 99.5%, indicating a high degree of certainty among market participants regarding future monetary policy actions by the ECB. However, the slightly lower-than-expected inflation figures could provide additional ammunition for the doves on the ECB’s Governing Council during their policy deliberations.
EUR/USD Live Chart
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