The EUR/USD pair has steadily declined, reaching the level of 1.0800, prompting economists at ING to analyze the outlook for the currency pair.
Today’s focal point on the Eurozone data calendar is the release of January Consumer Price Index (CPI), where the headline rate is anticipated to drop to 2.7% year-on-year, with the core rate at 3.2% YoY—the latter marking its lowest point since March 2022.
The combination of successful disinflation trends and lackluster activity data creates a challenging scenario for the European Central Bank (ECB) to counter early easing expectations, especially when compared to the Federal Reserve (Fed). Consequently, markets are currently assigning a 60% likelihood of an ECB rate cut in April.
EUR/USD is currently facing pressure at the 1.0790/1.0800 support level, with analysts cautioning that a breach could lead to further downside, exposing the 1.0715/1.0725 region. The soft CPI data adds to the complexities faced by the ECB, placing the currency pair in a precarious position with potential implications for its future trajectory.