According to the published data of the consumer price index in the eurozone, inflation jumped in annual terms by 8.1% against the consensus forecast of growth of 7.7% and 7.4% for the previous period under review. This puts the ECB in a very difficult position.
Galloping inflation should, if we proceed from the monetarist approach, be "treated" by raising interest rates and eliminating all support measures. But in the eurozone and America, and many other Western countries, it is not monetarist. The reasons for its appearance are different, we have repeatedly pointed this out earlier. But back to the market situation.
In theory, data on a strong increase in inflation should stimulate purchases of the euro currency, including against the dollar, but after the news is published, this is not noted. And the main reason lies in the fact that the euro is under pressure from the overall negative picture of the European economy, and the tough confrontation between Europe and Russia, which is why capital has been drawn to the United States. Investors buy the dollar as a safe-haven currency and as a currency with which to buy American assets denominated in dollars.
Considering all of the above, we believe that until the ECB, represented by its leader, directly informs about the decision to raise rates, the single currency will remain under strong pressure.