Search ForexCrunch

The euro-zone reported a better than  expected headline CPI: a drop of 0.1% year over year. Nevertheless, this is still  negative. Core CPI stands at 0.6%, showing that oil prices are not the only ones to blame. The unemployment rate also disappoints with 11.3%, following an upwards revision to 11.4% for the previous month.

EUR/USD slips below 1.0720. The low so far is 1.0718.

Italy also published its inflation data at the same time and the data shows a drop of 0.1% y/y, worse than  expected in the HICP, while a rise of 0.1% in the national number.

Inflation in the euro-zone was expected to remain negative, with a year over year drop of 0.3% in headline CPI, and a gain of 0.6% in core CPI. Oil prices carry the blame for deflation, but don’t explain the  low core CPI that is a result of economic weakness. The unemployment rate was  predicted to remain at 11.2%, after several months of falls.

EUR/USD was falling towards the release, trading at 1.0724 mostly due to end-of-quarter strength from the US dollar.

Earlier, Germany reported a  better than expected drop in unemployment, but this failed to lift the common currency. The  US dollar is back in the game, rising across the board.

The end of the month and the end of the quarter  usually see  portfolio adjustments that can explain moves that are not based on  fundamentals.

More:  Euro Will Fall In A Cyclical Upswing: Why & Where To? – Goldman Sachs

Here is how the fall looks on the chart:

EURUSD weak after inflation numbers March 31 2015 technical 30 minute chart