Published: 31 March 2026,03:37
Daily Market Analysis New
*Inflation seen rising to 2.6–2.7% YoY, driven mainly by energy shocks, testing the policy stance of the European Central Bank.
*Soft PMI and falling confidence highlight slowing growth, even as energy-driven inflation pressures build.
*Stronger CPI could support Euro, while weaker data may reinforce downside amid ongoing risk-off sentiment.
The Eurozone flash CPI for March is due today, offering the first major inflation reading since the Middle East conflict escalated. Analysts expect headline inflation to rise to 2.6–2.7% year-on-year from February’s 1.9%, almost entirely due to surging energy prices linked to the Iran-related disruptions. Core inflation is forecast to remain stable or edge slightly lower around 2.4–2.5%.
Recent data signal softer growth alongside rising price pressures. The S&P Global composite PMI fell to 50.5 in March from 51.9 in February, its weakest in ten months, with services activity nearly stalling and new orders contracting. Input cost inflation accelerated sharply to the fastest pace since early 2023, driven by higher energy costs. Consumer confidence plunged to its lowest level since October 2023, while the labor market stayed resilient with unemployment holding near record lows around 6.1%. ECB projections revised 2026 GDP growth down to about 0.9% due to the conflict’s impact.
A stronger-than-expected CPI print would highlight energy-driven inflation risks and could support a more hawkish ECB stance. Markets have priced in modest tightening expectations through June. This would likely provide some support to the euro by narrowing policy differentials with the Fed. However, EUR/USD has faced pressure recently, trading around 1.1480–1.1500 amid global risk-off flows and dollar strength.
Overall, today’s CPI will test how quickly geopolitical tensions are feeding into realized inflation. While softer activity data argue for ECB caution, an energy-led upside surprise could bolster the euro in the near term if it meets or exceeds forecasts. Investors should monitor national breakdowns from Germany, France, and Italy, along with any ECB signals, as energy markets and conflict developments remain key drivers.
Technical Analysis
The EURGBP pair has staged a strong recovery from its previous downtrend, establishing a solid base above the 0.8610 support level. The subsequent surge past its immediate resistance line confirms a bullish trend reversal, with the pair now trading in a constructive upward trajectory.
The bullish momentum is gaining strength, supported by a clear shift in momentum indicators. The Relative Strength Index is poised to break into overbought territory, reflecting robust buying pressure. The Moving Average Convergence Divergence has rebounded above its zero line and is diverging higher, confirming that positive momentum is accelerating and aligned with the price breakout.
The pair’s recovery follows a period of consolidation that allowed selling pressure to dissipate. With the 0.8610 level now serving as a new support base, the technical structure favors further upside. Immediate resistance lies near 0.8700, with a sustained break above this level opening a path toward the 0.8750-0.8770 region. The bullish outlook remains intact as long as the pair holds above the 0.8640-0.8650 zone.
Resistance Levels: 0.8726, 0.8800
Support Levels: 0.8670, 0.8610
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