German CPI preview: What to expect of EUR/USD?

By FXStreet The flight to risk assets in Europe strengthened the offered tone around the funding currency EUR, thereby pushing the EUR/USD pair well below the 200-DMA at 1.1047. The traders now await the preliminary Germany CPI release for February.

Weak CPI could hurt EUR

The data is expected to show the cost of living in Germany rose 0.5% m/m from January figure of -0.8%, which shall result in a annualized figure of 0.2%, which is well below the previous figure of 0.5%. The ECB is already worried about the falling inflation expectations and has hinted at more easing in March.

A weaker-than-expected preliminary CPI release would see EUR could see another sell-off, since it would only add to speculation of more ECB easing in March. Investors are already positioning themselves for a cut in deposit rate and expansion of QE program.

Meanwhile, a higher-than-expected CPI figure would be welcome news, but may not result in EUR appreciation, given the strength in the risk assets. Investors could look through data if it matches estimates or prints higher than estimates.

EUR/USD Technical Levels

The spot currently trades around 1.1022 (hourly 50-MA + hourly 100-MA). The immediate hurdle is seen at 1.1047 (200-DMA), above which …read more

Source:: FX Street