Although preliminary data on inflation in Germany came out much better than forecasts, the euro still fell. Nevertheless, we should still take note of the growth of inflation in the largest economy of the euro area (from 1.0% to 1.3%), while projections were for it to remain unchanged, the downward movement has stopped. It resumed only when the Asian session opened. Indeed, rising inflation in Germany seriously reduces the risks of a slowdown in inflation in Europe as a whole. It is for this reason that the basic forecast for today's data remains unchanged.
Inflation (Germany):
So, inflation in Europe is expected to accelerate from 0.9% to 1.0%. It turns out that in two months, inflation jumped from -0.3% to 1.0%. One cannot help but rejoice, at least in the sense that such a rise in inflation will force the European Central Bank to at least think about the possibility of adjusting its monetary policy. Naturally, in the direction of some tightening. This means that the yield on bonds of the euro area countries may go up. However, all of this will only work if inflation rises. But although the data for Germany inspires optimism, one should not forget that in France, that is, the second economy of the euro area, inflation has decreased. And it is quite significant. So the risk that the data for the entire euro area will turn out to be worse than expected is quite high. And in this case, the euro may continue its downward movement.
Inflation (Europe):
The EURUSD pair, during an intensive downward movement from the resistance level of 1.2250, reached the area of the psychological level of 1.2000, leaving behind a downward momentum of more than 200 points.
Market dynamics still show signs of acceleration, which is confirmed by a series of speculative manipulations in the structure of the inertial movement.
If we proceed from the quote's current location, then we have a control convergence of the price with the area of the psychological level of 1.2000, where the local low of February 17 has already been broken.
Considering the trading chart in general terms, the daily period, as before, is worth highlighting the January corrective move from the peak of the trend (1.2349) in the structure of which the current quote moves.
If we proceed from the logical basis associated with the area of the psychological level of 1.2000, then it is impossible to exclude a slowdown in the downward movement with a subsequent rebound in the price in the direction of 1.2100.
An alternative scenario will be considered if the price stays below 1.1980 for a four-hour period, which may lead to the prolongation of the main corrective move.
From the point of view of complex indicator analysis, we see that the indicators of technical instruments again signal a sell, due to a rapid downward movement.
