The euro weakened against the US dollar on Monday, dragged lower by the disappointing Consumer Price Index from the euro zone.
Eurozone’s inflation for March slowed to the lowest in four years, coming in below analysts’ estimates and could point out the next step the European Central Bank (ECB) may take at its next meeting due on Thursday. Some analysts are expecting the central bank to announce easing measures to boost the weak inflation.
The euro dropped 0.06% lower to $1.3743 per dollar at the time of writing, following the release of the data.
Eurozone’s CPI for the month of March grew by 0.5% in the year, after a 0.8% rise seen in the previous month and below analysts’ forecasts of 0.6%. The inflation rate has been below 1% in the last six months, lower than ECB target to maintain the inflation rate at just slightly below 2%.
“With regard to the currently low level of inflation in the euro area, one should bear in mind that two-thirds of this deceleration of prices can be attributed to energy and unprocessed food prices, which is to say cyclical factors that are likely to be temporary,” ECB Governing Council member Jens Weidmann said.
The core inflation rate added 0.8% after a rise of 1% seen in February. Other reports released revealed energy prices dropped by 2.1% in March, while prices for food, tobacco and alcohol increased by 1%, compared to the 1.5% rise seen in February; reports from Eurostat confirmed.
The bearish trend of the EUR/USD pair has been in place since when the Federal Reserve said it would continue to trim its monthly asset purchases by $10 billion a month.
Analysts are expected to the US non-farm payroll data due on Friday; to boost the greenback higher.
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