Published on 31.03.2023 15:50

The Euro is down in today’s trading session against the US dollar after the latest round of CPI figures from the Eurozone hit the market lower than predicted which raised expectations that the ECB may rethink the next rate hike.

Euro zone headline inflation slowed to 6.9% in March against analysts’ expectations for a figure of 7.1. The number was also down from the 8.5% recorded in February which was the sharpest fall on record. On the other hand, core inflation, stripping out energy and food, increased from 5.6% to 5.7%.

European Central Bank policymakers have been advocating this week for more interest rate hikes albeit at a slower pace which follows last month’s 50 basis point rate hike.

The focus now today will be on the release of more inflation data but this time from the US which will likely dictate The Fed’s next decision for a rate hike.

Traders with long positions in the Euro hope a measure of U.S. inflation due out today that is closely watched by the Federal Reserve will show upward pressure on prices easing. That might prompt the Fed to postpone plans for a possible rate hike at its May meeting.

“The nearer-term catalyst for further market moves will be the U.S. inflation read later on today. While inflation has been moving in the right direction overall, core inflation remains sticky. There are likely to be positive ripples across the major indices if we see core inflation loosening, because it clears further rubble out the road for risk-on assets to prosper,” said Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown.


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