The euro dropped to its lowest value since the start of February against the US dollar on Friday, thanks to strong US economic reports. Against sterling the euro also had a surprisingly poor morning, as it moved over 1% but the majority of this was eradicated in the afternoon. Data from the Eurozone on Friday showed that Germany’s consumer price index moved up to 0.4% in February, lower than the expected 0.5%, and down from last month’s 0.8%. This figure was actually the same as we saw this time last year.
The first main release for the week will be flash consumer price index from the Eurozone, a key figure as inflationary pressures continue to weigh on the single currency. On Wednesday Purchasing Managers Index for the euro is expected to fall again, from 52.3 down to 51 – and this is likely to cause euro weakness and increase the likelihood of the European Central Bank increasing its program of quantitative easing in the first half of March.