Eurozone inflation re-accelerated from 2.2% to 2.4% in December, a move largely driven by an overall expected base effect, notes FX analyst at ING Francesco Pesole.
EUR/USD may find reasonable support at 1.0300 for now
“The base rate was unchanged at 2.7%. The ECB's survey of inflation expectations showed a sharp rebound from 2.1% to 2.4% for three years ahead, but we doubt any of yesterday's figures will be enough to prompt the ECB to report difficult for them to change at this stage. Markets agree and are still pricing in four cuts this year.”
“Our short-term fair value model still returns a 1.3-1.5% risk premium in EUR/USD, which is above the 1.5 standard deviation and in buy signal theory. But the strong US macro story is fighting short-term technical factors on the pair. In any case, markets may not have to completely shut down that risk premium anytime soon, as part of it is still generally justified by downside risks to the eurozone behind Trump's protectionist threats.”
“There is only one speech by French central bank governor Villeroy to watch in today's eurozone calendar. EUR/USD may find adequate support at 1.0300 for now. “
Source: https://www.fxstreet.com/news/eur-still-embedding-some-risk-premium-ing-202501081019
