Euro vulnerable to further weakness in the near-term – MUFG

FXStreet Insights Team FXStreet

Economists at MUFG Bank analyze EUR outlook after sharply weaker Eurozone inflation data released last week.

Weaker inflation data will reinforce expectations for no further hikes from the ECB

The weakening growth outlook for China has been one factor that has weighed on the Euro over the summer alongside weak growth in Europe and the paring back of ECB rate hike expectations.

The release of the latest CPI reports at the end of last week revealed that headline and core inflation both fell sharply to 4.3% and 4.5% respectively in September. The weaker inflation data will reinforce expectations for no further hikes from the ECB and cast doubt on whether the September hike was necessary with the Eurozone economy currently so weak as well. It leaves the Euro vulnerable to further weakness in the near-term.

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FXStreet Insights Team

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