The highlight of this week in the eurozone will be the inflation readings for the month of March, where another acceleration is widely expected. Therefore, economists at ING still expect the EUR/USD pair to suffer downside risks.

Inflation readings this week might not help much

“We suspect that markets are almost fully pricing in the increase given the impact from the Ukraine conflict on energy prices and supply chain disruption, and considering that 100bp of ECB tightening is already factored into money market expectations for the next 12 months, the inflation readings may not prove enough to offset the still negative external environment for the euro this week.”

“We still see mostly downside risks for EUR/USD in the short-term, with a move to 1.08 looking likely by the end of the year.”