EUR/USD gets set to go

Alexander Kuptsikevich FxPro

The slowdown in German inflation is fuelling hopes that the ECB will ease policy in the coming months. German CPI rose 0.4% m/m, weaker than the 0.5% expected. Annual inflation slowed from 2.5% in February to 2.2% in March, the lowest since May 2021.

Germany's reading is a useful guide to what to expect in the eurozone on Wednesday, which is likely to come in weaker than average market expectations for headline inflation to slow from 2.6% to 2.5% and core inflation to slow from 3.1% to 3.0%. At the same time, it would take a significant deviation from the forecasts to have a material impact on prices.

EURUSD slipped to 1.075, the lower boundary of the range since November. This is a good starting position for new momentum on a breakout or bounce. US data released on Monday was supportive of a strong dollar, while German inflation data was in favour of a weaker euro. If the balance of power remains the same, EURUSD may decide to move towards 1.05.

Author

Alexander Kuptsikevich

FxPro

Alexander Kuptsikevich, a senior market analyst at FxPro, has been with the company since its foundation. From time to time, he gives commentaries on radio and television. He publishes in major economic and socio-political media.

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