The European Standard HICP inflation measure shows that Germany is in deflation: prices have dropped 0.2% y/y, worse than 0% expected and +0.4% last time.
This was not totally unexpected after the poor releases from the various German states. These had already put pressure on the common currency.
Nevertheless, EUR/USD is pressured after the publication, falling closer to 1.10, well within the 1.0960 to 1.1070 trading range.
Other figures also miss: the national y/y inflation measure stands at 0% and both the national and HICP month over month figures disappointed. On Monday we will get the all-European data, and the negative data from Germany as well as the big fall in Spain, -0.9%, both imply a negative number also for all the currency area.
The only hope for the hawks will be the core inflation, but it’s important to remember that the ECB’s target is headline inflation.
We will soon have the release of US GDP
See how to trade the US GDP with EUR/USD
more coming
