The eurozone releases flash inflation estimates for March today. Single countries’ CPI prints released throughout this week have not diverged much from consensus, which for the eurozone is looking for a slowdown from 2.2% to 2.1% in the headline rate and a tick-up from 2.4% to 2.5% in the core. Barring major surprises, there are very few implications for European Central Bank pricing, as policymakers have indicated they will be more responsive to activity slowdowns than price fluctuations.
Earlier this week, we thought the euro was losing its shine, and a couple of additional soft EUR/USD sessions have further convinced us that the return to more normal conditions in US asset markets could continue to weigh on the pair. The 1.13 area remains an important one. A decisive break lower may need to wait for markets to digest some soft (but not alarming) US payroll figures today. Still, we believe the risks are skewed to 1.11 rather than 1.15 in the coming weeks.
