Euro at 10 week low as inflation data puts pressure on ECB to cut interest rates

An action-packed start to the month, with important data releases. Today starts with PMI data from the EU and UK. Both are expected to be very close to the previous and could do with a lift after last week’s emerging markets sell off. The euro is at a a 10-week low after slightly weaker inflation data put pressure on the ECB to cut rates to counter deflation risks. In the US, the ISM PMI will be released this afternoon and a slight drop is expected.

There’s also the RBA rate announcement this week, expected to remain unchanged. But with the AUD being higher than what the RBA want they could use this as a tool to weaken the currency. ADP data in the US will be announced on Wednesday and has been posting better than expected results over the last two months.

On Thursday the UK and EU Central Banks will announce their rate decisions. The consensus is that no change is expected but the ECB have shocked the market before with a surprise rate cut after weaker than expected inflation data. We find ourselves in the same territory, with weaker inflation causing a risk of deflation.

Friday is when the non-farm payrolls for the US will be abband after last month’s very weak data due to the big freeze, it is expected to be back to normal. Lots of data to digest this week so expecting a lot of swings as each are announced and also any comments from central banks.

EUR/USD

Supports 1.3460 1.3400 1.3380 | Resistance 1.3500 1.3560 1.3600

 


USD/JPY

Supports 101.75 101.60 101.15 | Resistance 102.45 103.00 103.50

GBP/USD

Supports 1.6390 1.6370 1.6315 | Resistance 1.6470 1.6530 1.6610