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All German figures fall below expectations: m/m CPI and HICP rise by only 0.3% each. Y/y CPI slides to 1% and HICP dips to 0.9%. German year over year CPI inflation was expected to slide from 1.2% to 1.1% in March in the preliminary reading. The HICP was expected to remain unchanged at 1%. Month over month, both were expected to rise by 0.4%. Early indications from the various German states showed a slowdown in price rises, so a miss is not surprising.

EUR/USD was attempting a recovery towards the publication, rising from the lows of near 1.37 to 1.3740. The pair continues to recover in the aftermath, in what looks like a “sell the rumor, buy the fact” reaction based on early state data.

EURUSD March 28 buying the fact on weak German inflation data 30 minute forex chart

The reaction to Monday’s data will probably be different. Very different.

The German inflation numbers carry a lot of weight in the flash CPI estimate for the whole euro-zone published on Monday, and this has a big impact on the ECB decision.

The ECB upped the ante with its dovish tone earlier in the week, further opening the door to QE and to a negative deposit rate. This sent the euro to a double bottom and then below this line.

More: 5 most predictable currency pairs.