Release Explanation: The CPI measures the average price of a fixed market basket of goods and services purchased by consumers, and therefore gives an overall read of Inflationary pressures. It is the most widely used Inflation indicator of Central Banks, Institutions, and Governments. It is used to calculate Cost of Living numbers for Government programs. “Each regional Central Bank will have their own CPI Target rate, and each will differ in line with the way they individually want to control the aspects of their own economies.” TheLFB-Forex.Com Trade Team said
TheLFB-Forex.Com Trade Desk Thoughts: Inflation fell in March to 0.6% from one-year earlier, in-line with the Flash CPI forecast. The strong declines in CPI sub-indexes dragged the inflation gauge under the 2% target much earlier than forecast. However, the core CPI was again higher than expected, 1.5% vs 1.4%.
The main components with the highest monthly rates were clothing, by 7.5%, and household equipment, by 0.5%. The lowest were recreation & culture, -0.4%, housing and transport, both falling by -0.3%.
“The CPI is a very important release especially at this point in time. According to the ECB forecast, the CPI is expected to fall below the 0% level in the coming quarter, but this will only happen for a short period. However, if the inflation gauge remains higher than expected, the ECB may be tempted to take unusual measures” TheLFB-Forex.com Trade Team noted.
Forex Technical Reaction: The euro dropped 20 pips during the news release. Since the new trading day started, the euro has fallen 70 pips and is currently testing the 100-day simple moving average.