Euro Slides As Lower German CPI Quells ECB Rate Hike Expectations

By Tzu-Wen Chen,

THETAKEAWAY: [German CPI slows more than expected] >[Quells support for ECB rate hike] > [Euro weakens]

German CPI inflation slowed more than expected in March after hitting a three-month high in February on the back of rising energy prices. The eurozone’s largest economy posted a year-over-year inflation rate of 2.1 percent, falling from 2.3 percent in February and missing the consensus forecast of 2.2 percent according to economists surveyed by Bloomberg News. Consumer prices rose 0.3 percent from the previous month as expected, declining from February’s reading of 0.7 percent.

EU-harmonised CPI rose 2.3 percent in March over the previous year in line with expectations, slowing from 2.5 percent in February. On a month-over-month basis, EU-harmonised CPI decelerated from 0.9 percent in February to 0.4 percent in March. The lower-than-expected outcome appears unlikely to support ECB rate hike expectations.

EURUSD 1-minute Chart: March 28, 2012

Chart createdusing Strategy Trader – Prepared byTzu-Wen Chen

As seen in the EURUSD 1-minute chart above, the euro weakened against the euro, as the lower-than-expected inflation data quelled support of ECB rate hike expectations. The euro fell 10 pips against the greenback in the first 15 minutes after the data release, and was trading around $1.3331 at the time of this report.
DailyFX is the forex news and research arm of FXCM, Inc (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

Original Article: http://www.dailyfx.com/forex/market_alert/2012/03/28/Euro_Slides_As_Lower_German_March_CPI_Quells_ECB_Rate_Hike_Expectations.html

DailyFX is the forex news and research arm of FXCM (NYSE: FXCM), which provides currency trading and brokerage services and is an advertiser on TheStreet websites. Any opinions, news, research, analyses, prices, or other information is provided as general market commentary, and does not constitute investment advice. Dailyfx will not accept liability for any loss or damage, including without limitation to, any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Currency trading involves significant risk of loss. Individual authors may hold positions in the currencies discussed in the article.

More from Currencies

Bitcoin Today: Prices Close to Flat in Low-Volume Trading

Bitcoin Today: Prices Close to Flat in Low-Volume Trading

Markets Wobble as U.S. Readies More China Tariffs

Markets Wobble as U.S. Readies More China Tariffs

Watch These Two Crypto Experts Fiercely Debate the Future of Regulation

Watch These Two Crypto Experts Fiercely Debate the Future of Regulation

Bitcoin Today: Prices Attempt to Rally Following Early Weakness

Bitcoin Today: Prices Attempt to Rally Following Early Weakness

Ether Prices Rally After SEC Director Says He Doesn't Consider It a Security

Ether Prices Rally After SEC Director Says He Doesn't Consider It a Security