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Euro flat after CPI data
The euro is trading at $1.3536, trading within a tight range this morning due to the level of inflation remaining at 0.5%. This is well below the 2% target but it was in line with expectations, so there was little movement on the back of the report. The euro is showing no sign of recovering the ground it has lost since the European Central Bank interest rate cut, but at the same time it is finding support around the $1.35 level.
The tensions between Russia and Ukraine are on the rise, and the government in Kiev must repay an outstanding debt to a Russia state-owned gas supplier before additional gas can be supplied to Ukraine. A decline in the supply of gas to central Europe could see a drop in the euro. If the euro drops below $1.35 the next level down is $1.3477.