Euro-zone inflation ticked up 0.2% in CPI and +0.3% Core CPI according to preliminary data for April. EUR/USD is somewhat higher. The shift in the dates of Easter did have a positive effect on inflation in April, as the ECB expected. But is this good enough? Not at all. These numbers just worsen the situation for the ECB and Mario Draghi. He is stuck between a rock and a hard place, especially in light of the exchange rate. Not too hot, not too cold The rise in prices still leaves inflation at the low level of 0.7%, very far from the “2% or a bit below” ECB target. Also core inflation is still at low ground of 1%, also too far. These low levels accompany us for a long time already. On the other hand, the level of inflation is above the “danger zone” of below 0.5% where the ECB will be forced to act. Deflation is a danger, but is it really around the corner? Not exactly. It will be hard to convince the German Bundesbank to set a negative deposit rate or even QE without the urge to do so. Without imminent action in sight, the value of the euro rises. Apart from EUR/USD trading on high ground, it is important to remember that with the recent depreciation of the Chinese yuan, EUR/CNY is at high levels as well. The high exchange rate makes European exports less attractive and lower import prices also push inflation lower. Diminishing verbal intervention The best thing for Draghi would be to have a lower exchange rate for the euro while keeping his powder dry. Draghi tried various ways of verbal intervention, including an explicit correlation between monetary policy and the value of the euro. Each verbal intervention has less impact than the previous ones. The diminishing effect is eroding the credibility of the ECB and has little impact on the markets. After Draghi tied policy to the exchange rate, will he indeed act just because of the exchange rate? Will his German colleagues on the Governing Council stand shoulder to shoulder with him on this? Draghi’s next policy move is definitely a complicated task. What do you think? More: ECB really getting ready for QE? Job offer suggests so 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. Yohay's Google Profile View All Post By Yohay Elam Opinions share Read Next EUR/USD April 30 – Euro Posts Gains On Strong Eurozone Kenny Fisher 8 years Euro-zone inflation ticked up 0.2% in CPI and +0.3% Core CPI according to preliminary data for April. EUR/USD is somewhat higher. The shift in the dates of Easter did have a positive effect on inflation in April, as the ECB expected. But is this good enough? Not at all. These numbers just worsen the situation for the ECB and Mario Draghi. He is stuck between a rock and a hard place, especially in light of the exchange rate. Not too hot, not too cold The rise in prices still leaves inflation at the low level of 0.7%, very far from… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk. 3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk. 4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk. 5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.