Home Trading EUR/USD falls as eurozone inflation eases

EUR/USD falls as eurozone inflation eases



The euro is still busy, trading at 1.0624 on Thursday. It was down 0.40%. This is after the euro gained 0.9% a day before.

Inflation in the Eurozone falls to 8.6%

The euro’s moves today and yesterday have in large part been dictated by inflation releases. Today’s Eurozone Final CPI was 8.6% in January. This is a sharp decline from December’s 9.2%. After reaching a peak at 10.6% in October, headline inflation eased for the third straight month. This downward trend has not been followed by the core rate, which ticked up to 5.3% y/y (up from 5.2% in December). The improvement in headline inflation has calmed fears that the ECB will need to raise 50 basis points in May, following the expected 50-bp rise at its March 16 meeting.

The euro was almost 1% higher Wednesday due to concerns about the ECB remaining aggressive. German inflation rose to 9.3% in February from 9.2% in January, and is above the 9.0% estimate. The usual suspects were at play in driving inflation higher – food and energy. Although the government provided energy subsidies, energy prices rose by 23.1% in January, while food prices soared by 20.2%. France and Spain also had their inflation reports.

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