EUR: Inflation expectations and ECB stance – TD Securities

💡 DMK Insight

Eurozone inflation expectations are cooling, and here’s why that matters for traders: A projected dip in headline inflation to 1.7% y/y could signal a shift in market sentiment, especially as traders brace for upcoming economic data releases. While the ECB sees this as a temporary blip, the market might react differently. If inflation continues to trend downward, it could pressure the euro and impact forex pairs like EUR/USD. Traders should keep an eye on the ECB’s next moves; any hints of policy adjustments could create volatility. But here’s the flip side: if inflation stabilizes or rebounds unexpectedly, it could lead to a hawkish pivot from the ECB, sending the euro higher. Watch for key resistance levels around 1.10 in EUR/USD, as a break above could indicate renewed bullish sentiment. Keep your charts updated on inflation data releases and adjust your positions accordingly to capitalize on potential swings.