The euro experienced more limited movement in the absence of any overly influential data. European Commission Economic Forecasts put Eurozone inflation based on consumer prices at 1% for 2014, which is a significant reduction November’s estimate of 1.5%, and dangerously below the European Central Bank (ECB)’s 2% target. Whilst this aspect of the forecast certainly does not bode well for the single currency, its effect on the performance of the euro throughout the day was not significant given that low inflation in the Eurozone is already a recognised problem.
Looking to today’s events, it is this morning’s German Consumer Confidence data that is the most notable release from the Eurozone. Figures released at the end of January caused the euro to strengthen as the data showed a marked improvement, so today’s figures could have a significant impact on euro movements in currency markets. Traders will also bear in mind key data released elsewhere that are likely to affect the euro, such as the second estimate of UK growth for the fourth quarter of last year, as well as US Home Sales data.
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