EUR flows: EUR/USD edges lower after softer CPI
Eurozoen CPI drops below target to 1.9%, but FX impact likely to be modest
EUR/USD dipping slightly on the softer than expected Eurozone CPI data. The headline came in at 1.9% and the core at 2.3%, both 0.1% below consensus. We wouldn’t expect a major impact, as this week’s rate cut is fully priced in and this month’s data won’t have much influence on future expectations. Plus EUR/USD has in any case been quite insensitive to yield spread moves in recent weeks. So we wouldn’t expect much more than EUR/USD dipping back to 1.14, with any break of the range top above 1.15 likely to require either more USD negative tariff news or evidence of significant weakening in the US labour market on Friday. We doubt we are yet at the point to expect such data.
