A new low for euro-zone inflation: 0.5% in March according to the flash read. Core inflation dropped to 0.8% as expected. CPI inflation in the euro-zone was expected to drop from 0.7% to 0.6% in the preliminary numbers for March. Core inflation was predicted to slide from 1% to 0.8%. The numbers are critical for the ECB rate decision on Thursday.
EUR/USD traded around 1.3740 before the publication. The pair fell to 1.3721 but rebounded quickly to the pre-release levels. Did the core number offset the initial headline disappointment?
In any case, this is the lowest headline Consumer Price Index since 2009. Prices fell after the financial crisis, but core CPI remained solid. We are now seeing both slide.
On Friday, Germany reported lower than expected inflation numbers on all fronts, with HICP falling to only 0.9%. The weakness joined dovish comments that were heard earlier from various ECB members.
Support lies at 1.3740 followed by 1.37. Resistance is at 1.38 and 1.3830. For more, see the euro dollar forecast.
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