As Eurostat prepares to unveil the preliminary February Harmonized Consumer Price Index (HCIP) inflation data for the Eurozone, economists at ING provide insights into the Euro’s (EUR) upcoming trajectory.
The prevailing expectation is for a deceleration in the headline rate to 2.5% and the core rate to 2.9%, according to consensus estimates. While any deviation from these expectations may induce short-term fluctuations in Eurozone rates and the Euro, analysts anticipate that the broader narrative is unlikely to be significantly impacted. Christine Lagarde and the Governing Council are expected to maintain their stance, seeking more concrete evidence of disinflation.
The European Central Bank (ECB) remains vigilant in its pursuit of conclusive indicators of disinflation, shaping the outlook for EUR/USD. The analysis suggests that the Euro might encounter another month dominated by the strength of the Dollar rather than witnessing fresh dynamics originating from the Eurozone.
In the face of evolving economic conditions, the EUR/USD trajectory is poised to be influenced more by the prevailing strength of the Dollar rather than Eurozone-specific dynamics. The anticipated inflation data release, while capable of inducing short-term market movements, is unlikely to alter the overarching narrative of cautious Eurozone economic dynamics. The Euro’s performance is expected to continue navigating under the influence of broader global economic factors, with the Dollar likely to play a dominant role in shaping the EUR/USD landscape in the coming month.
