Eurozone: Headline CPI may dip - ING

Viraj Patel, Research Analyst at ING, suggests that there are downside risks to today’s headline Feb EZ CPI inflation release after yesterday’s miss in the German CPI data.

Key Quotes

“Yet, we prefer to focus on the core CPI reading and maintain the view that this needs to cement itself above the 1.0% YoY level over the coming months for the EUR’s bullish medium-term trajectory to remain intact. In the immediate future, softer EZ data has coincided with a narrower focus on looming political event risks (namely ‘Super Political Sunday’ which sees the Italian election and SPD grand coalition vote) – with EUR crosses drifting lower this week in response (ie, EUR/CHF below 1.15). Any miss in the EZ CPI data will add fuel to the downward EUR/USD correction towards 1.2100/30.”