EUR: Inflation to favour dovish ECB stance – ING

The euro’s outlook remains tied to developments on US tariffs and on Ukraine peace talks, ING’s FX analysts Francesco Pesole notes.

EUR/USD to move back to 1.050

"EUR/USD took a hit late Friday after the Trump-Zelenskyy incident, but has rebounded since trading resumed on Sunday evening – perhaps on the news that Ukraine remains open to a mineral deal with the US and that the EU is actively trying to bring the US back to the negotiating table with Ukraine."

"Today, the eurozone releases inflation estimates for February after regional prints provided some tentatively dovish signals. Spanish and Italian CPI undershot, German’s inflation was unchanged, but the core measure declined. Consensus is for a deceleration to 2.3% in eurozone headline CPI and to 2.5% in core. We expect this CPI report to endorse a still-dovish tone by the European Central Bank as it delivers a highly anticipated cut this Thursday."

"Still, with markets pricing in three cuts by year-end in the eurozone, the euro’s downside risks ahead of Thursday are limited. In our baseline USD-negative scenario for this week, we can see EUR/USD moving back to 1.050."