Deflation in the euro area will lead to the fall of the euro
Today has been published preliminary data on consumer price inflation in the euro area, which in February unexpectedly fell to -0.2% vs. predicted 0.0% and 0.3% in January. It should be noted that core inflation was also below the forecast of 0.9% and totaled only 0.7%. Considering the future of the ECB meeting on March 10 which will probably decide on additional measures to stimulate inflation and the euro area economy as a whole, we expect a drop in euro prices with potential targets at 1.0800, 1.0700 and 1.0550. The increase in the near future is possible only within the correction.
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