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Euro Pushes Forward with Inflation

The first release of CPI figures for March show that prices are rising at an annual rate of 2.6%, significantly higher than 2.4% that was reported last month and that was expected now. This gives a lot of food for the hawks at the ECB. Will we see a 50 point hike next week? EUR/USD continues steadily up towards the one year high.

The headline Consumer Price Index, which is the figure eyed by the ECB, continues to rise. After crossing the target level of 2% a few months ago, it continued rising. Expectations were for a stabilization at the current levels, but the jump to 2.6% leaves no room for doubt – a rate hike is coming next week.

The big question is the size of the hike – the consensus stood on a raise from 1% to 1.25% – a standard 0.25% hike. Recent comments by Jean-Claude Trichet hinted about a series of rate hikes or an immediate 50 basis point move now.

With the headline figure at 2.6%, even if this is only the first release, the chances of seeing the European Minimum Bid Rate at 1.50% in exactly one week have significantly grown.

EUR/USD is already at 1.4230, rising from around 1.4190 before the release. Earlier today, the German Unemployment Change was also good for the Euro – it showed a drop of 55K unemployed people, much better than expected.

The key level is 1.4282 – the peak seen in November, and also the highest level in a year.

For more technical levels and upcoming events, see the EUR/USD forecast.

Yohay Elam

Yohay Elam

Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts.