-Analysts from Societe Generale
It seems that investors neither paid attention to Fed's pledge to start raising interest rates next year nor they took seriously Mario Draghi's speech in Washington DC. Furthermore, unrevised inflation and disappointing current account were not able to push the single currency lower. The most traded currency pair was still trading comfortably above the 1.38-mark.
A shocking drop in the inflation rate in March was confirmed on Wednesday, keeping pressure on Mario Draghi to intervene until prices do not rebound. The annual inflation rate in the 18-nation's bloc stood at 0.5% last month, falling from 0.7% a month earlier. The largest increases were logged in prices of tobacco, restaurants and bars. Moreover, the Eurostat reported on a stark disparity among members, with Greece posting a 1.5% drop, Cyprus 0.9%, while Austria and Malta both registered 1.4% price increases. Consumer prices have been in danger zone below 1% for the last six straight months, fuelling speculations the European Central Bank will have to pull the trigger. Draghi made it clear they are ready to deploy unconventional measures in order to assure that inflation will not go any lower. Moreover, the strength of the shared currency makes imports cheaper and pushed the prices Europeans pay for goods and services lower.
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