Currencies fight Euro inflation

andres del risco

Euro – Not Much Happening

The common currency shrugged off yesterday’s dismal Euro zone inflation data and held firm against the greenback following the US Fed Chief, Janet Yellen’s dovish comments. Consumer price inflation in the currency bloc fell to the lowest level since October 2009, boosting speculation of deflation setting in the region. In the wake of last week’s comments from the ECB President, which suggested the possible use of additional policy measures to counter low inflation, this week’s ECB policy meeting will be closely scrutinised by investors to ascertain the central bank’s stance.

Meanwhile, the single currency has moved marginally higher against the US Dollar this morning, tracking fairly modest economic data across Europe. The manufacturing PMIs in France, Spain and Italy have been encouraging, although the German manufacturing activity eased marginally for March. Also, the number of unemployed people in Germany dropped last month, once again highlighting the uneven nature of the nation’s economic recovery. Later today, markets will keep a close watch on the Euro bloc’s unemployment data along with the US ISM manufacturing activity data for further direction.

The euro remains flat against the pound and is largely in no man's land. There has been little movement over the past 48 hours.

Key Economic Events

Interbank Exchange Rates (09:00)
GBP 1.2080 1.6662 12.926 1.7997
EUR 0.8279 1.3795 10.702 1.4897
USD 0.6002 0.7249 7.7577 1.0802

Currency Support Levels
GBP/USD Support 1.6620 1.6578 1.6546
GBP/EUR Support 1.2055 1.2013 1.1982
EUR/USD Support 1.3733 1.3697 1.3660

Currency Resistance Levels

GBP/USD Resistance 1.6694 1.6726 1.6768
GBP/EUR Resistance 1.2128 1.2159 1.2201
EUR/USD Resistance 1.3806 1.3843 1.3879

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