 | Forex - Euro holds gains after weak euro zone inflation data
The euro remained higher against the dollar and the yen on Monday after data showing that the annual rate of inflation in the euro zone fell to the lowest level since November 2009 in March added to concerns over the risk of deflation in the region.
Forex - Euro holds gains after weak euro zone inflation dataEuro remains broadly higher after weak euro area inflation report
EUR/USD was up 0.30% to 1.3792, after initially falling to lows of 1.3720 following the release of the data.
The pair was likely to find support at 1.3720 and resistance at 1.3825.
Eurostat said the annual rate of consumer inflation slowed to 0.5% this month from 0.7% in February, undershooting expectations for a reading of 0.6%. The European Central Bank targets an inflation rate of just under 2%.
The report showed that core inflation rose 0.8% in March, in line with forecasts, but down from 1.0% in February.
The weak data fuelled expectations that the ECB could take steps to bolster the fragile recovery in the euro area at its upcoming policy meeting on Thursday. Last month the central bank left rates on hold, but indicated that it was prepared to take decisive action if the inflation outlook continued to deteriorate.
The euro fell to one-month lows against the dollar last week after ECB officials indicated that they are considering fresh policy options to stave off the risk of deflation in the region.
However some investors expect the ECB to leave monetary policy on hold on Thursday, after Bundesbank head Jens Weidmann said Saturday that the euro zone is not in a deflationary cycle, and that the slowdown was due in large part to temporary factors, such as falls in food and energy prices.
The euro rose to more than two-week highs against the yen, with EUR/JPY rising 0.70% to 142.38.
Demand for the safe haven yen was hit as risk appetite was bolstered by hopes that China will act to shore up economic growth following comments by Chinese premier Li Keqiang on Friday.
The shared currency was also higher against the pound, with EUR/GBP rising 0.25% to 0.8284. |
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