The Eurozone was also impacted by the triggering of Article 50. However, this wasn’t the reason for the weak performance of the single currency.
The sharp drop in EUR/USD was based around two factors. Firstly, US consumer confidence hitting a 16-year high and Vice Fed Chair Fischer confirming that two more rate hikes are likely to happen this year. Secondly, there were reports that the markets have over-interpreted the European Central Bank’s messages earlier in March. It was thought that the change in tone suggested that we were about to see a change in monetary policy due to increased inflation. However, an unnamed source told Reuters that policy-makers are not too worried about inflation.
This could reduce the impact of today’s inflation figures. Both German and Spanish inflation are due. The Eurozone headline figure will be released tomorrow.