The EUR/USD pair has edged lower to the 1.0800 level, and analysts at ING offer insights into its outlook. They point to the Eurozone’s January Consumer Price Index (CPI) release as a significant factor, with expectations for a decline in the headline rate to 2.7% year-on-year and the core rate to 3.2% YoY, the lowest since March 2022.
Given ongoing disinflation trends and weak activity data, the European Central Bank (ECB) faces challenges in pushing back against early easing expectations. Markets currently assign a 60% probability to an April rate cut from the ECB. The EUR/USD support is currently being tested at 1.0790/1.0800, and a break below could open the door to the 1.0715/1.0725 region.