EUR/USD declines after CPI data

The EUR/USD pair has fallen into multi-week lows due to an unexpected increase in US CPI inflation, pushing up rate cut hopes. The European February ZEW Economic Sentiment Survey improved, and Euro traders are gearing up for European GDP figures due on Wednesday.

On Thursday, more US economic data will be released, with US Retail Sales expected to slow in January. The monthly CPI inflation ticked up to 0.3% in January versus the forecast 0.2%, and the core MoM CPI also ticked up to 0.4% from the forecast steady hold of 0.3%.

Annualized headline CPI inflation printed at 3.1%, above the forecast 2.9% but slightly easing slightly from the previous period’s 3.4%. Money markets are now pricing in a first rate cut from the Federal Reserve in June or July after getting knocked off of a March rate trim bet.

Eurozone ZEW Economic Sentiment survey for February improved to 25.0, reversing the forecast decline to 20.1. European GDP is expected to hold flat at 0.0% for the fourth quarter, while annualized European quarterly GDP is forecast to hold steady at 0.1%.