German consumer prices slip sharply to 0.1% in March
- German consumer prices slip sharply to 0.1% in March from 0.7% in February.
- Spanish flash CPI shows a 0.1% growth (year over year) in March versus 0.6% expected.
- EUR/USD challenges the 1.1020 support as the U.S dollar index tops 99.00 level again.
The Federal Statistical Office of Germany released its monthly report on the prelim consumer price index (CPI) on Monday. The data showed annual inflation to have sunk significantly in Germany this month. March’s reading was also recorded sharply lower than the ECB’s (European Central Bank) target for annual inflation.
According to economists, March’s data hints at the need for the ECB to resort to further policy measures to protect the economy against the impact of the Coronavirus pandemic.
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Economists Expected No Growth In The Prelim CPI In March
Destatis revealed a 0.1% growth in the German prelim CPI in March. The figure was recorded at a much higher 0.4% in February. Economists had expected the index to show no growth (0.0%) in March.
The European Central Bank has a target of near but lower than 2% annual inflation. On a year over year basis, the German consumer prices (harmonized) saw a 1.3% increase in March as compared to February’s 1.7% growth. Economists had anticipated a 1.4% year over year growth in the German inflation measure.
Amidst the ongoing health emergency that, according to the IMF (International Monetary Fund), has pushed the global economy into recession, the ECB has removed all restrictions from the amount of bonds that it can purchase from an economy included in the Eurozone. The move enables the central bank to print potentially unlimited currency to help enhance its response against the pandemic.
In separate news, the National Statistics Institute of Spain also released its report on flash CPI on Monday. The data showed a 0.1% growth (year over year) in the index in March versus a much higher 0.7% growth that was recorded in February. Economists had expected consumer prices to post a slower pace in March but their forecast was still capped at a higher 0.6% growth.
EUR/USD Remains Downbeat On Monday
In the forex market, EUR/USD is keeping downbeat on Monday. The pair opened at 1.1135 but dropped sharply to challenge the 1.1020 support. Breaking below the support will open way for a further decline to 1.0985 level.
On the upside, the pair is likely to meet resistance at 1.1105 level. The overall trend in EUR/USD in the short-term is currently bearish.
The U.S dollar index, on the other hand, is catching steam and has recently topped the 99.00 level again from a daily low of 98.30. The index is currently trading at 99.14.