This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
The EUR/USD headed higher after the release of an EU inflation level of 0.5%, worse than the expected 0.6%. The reaction in the EUR/USD reflects a market that is well aware of the deflationary pressures that are hanging over the eurozone, and the lack of action by the European Central Bank to tackle this.
ECB president Mario Draghi is scheduled to hold a press conference on Thursday, and it is highly likely that he will receive a barrage of questions regarding what action he plans to take. At the same time, it is likely that he will also be pressurised into giving a timetable for these events.
As the markets were coming to terms with worse inflation levels in the EU, they were also digesting Janet Yellen’s latest comments. The tone inferred that the current stimulus the US was injecting into the markets could still be around for a while.
The EUR/USD continues to creep higher as it bounces off the 50-day moving average. The consensus for the EU’s interest rate is to remain unchanged at 0.25%, and there may still be surprises yet to be announced; traders should be wary of this.