The US-EU inflation differential is expanding which could be negative for EUR/USD.
The US inflation, as measured by consumer price index (CPI), has increased to 1%. The Eurozone CPI declined into the negative territory. As a result, the Eurozone-US CPI gap looks wide, as noted by Wall Street Journal’s “The Daily Shot newsletter.”
The widening inflation differential boosts the case for additional monetary easing by the European Central Bank and could add pressure to the EUR in the near term.
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