FX.co ★ Euro zone consumer inflation falls for the first time in months

According to the published data, the consumer price index in the Eurozone dropped to 7.4% year on-year from 7.5% and to 1% month-on-month from 0.1%. According to the forecast, in April consumer inflation should be the same as in March.

Following the release of the data, the three major European stock indexes moved into negative territory, while the decline of the euro against the dollar paused.

How can this dynamic be explained and what can we expect in the markets?

We believe that the market has taken into account the likely stabilisation factor for inflation. The values themselves were better than expected, but not by much. Therefore, it was hardly worth hoping for a strong change in the market. However, the fact that inflationary pressures are slowing down could allow the ECB not to raise rates again in June. This could be good for European equities and would put pressure on the Euro in a pair with the Dollar on the wave of expectations of a prospective interest rate hike between the Fed to 1.50% and the ECB where the rate could be left at 0.0%.