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The European Central Bank (ECB) followed a similar line to last week’s statement from Mario Draghi. The eurozone has been in focus lately, as the cost of living in the region has been in decline. This has highlighted the weakness of consumer demand, and the ECB has been under pressure to intervene.
Today’s report suggested that inflation in the eurozone will remain subdued in the medium term, whereas global inflation is likely to increase, which in turn may push up the cost of living in the region. The ECB’s reluctance to lower interest rates or start a bond-buying scheme has boosted EUR/USD.
Tomorrow we are expecting gross domestic product (GDP) updates from France, Germany, Italy and the eurozone. A weak set of figures could suggest that the ECB needs to begin a stimulus package, which could drive the euro lower.
As Brenda Kelly noted, we are above the support line at the $1.3485/90 level, and $1.3833 remains the next target upwards.