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The EUR/USD is trading at $1.3839, up 0.2%, after the level of inflation came in at 0.5% for March, in line with expectations. However, the core consumer price index which strips out food and energy prices actually dropped from 0.8% to 0.7%.
The European Central Bank is still facing pressure with some eurozone countries still suffering from deflation. Despite the headline inflation figure remaining unchanged, traders are viewing this as a positive because it did not decline.
The situation in Ukraine remains unresolved but there have been no further developments, which has encouraged some short-covering and bargain hunting. As Alastair McCaig stated, any violence in Ukraine could drag the EUR/USD towards the 100-day moving average of $1.3717. As I previously mentioned, the gap between Friday’s close and Sunday’s open needs to be filled if the euro is to retest the $1.39 mark.