Eurozone: Inflation undershoots ahead of ECB meeting – ABN AMRO

💡 DMK Insight

Eurozone inflation easing to 1.7% is a game changer for traders: This drop from 1.9% in December signals a potential shift in the ECB’s monetary policy stance. With core inflation also dipping to 2.2%, the central bank might hold off on rate hikes, which could lead to a weaker euro against major currencies. Traders should keep an eye on the EUR/USD pair, especially if it approaches key support levels around 1.05. A sustained break below could trigger further selling pressure. But here’s the flip side: if inflation stabilizes and economic indicators improve, the ECB might pivot sooner than expected. This could spark a rally in the euro, especially if the market is caught off guard. Watch for upcoming economic data releases and ECB commentary for clues on their next moves. The immediate focus should be on how the market reacts to this inflation data, particularly in the context of broader economic trends in the Eurozone.