Yahoo Finance

Talking Points:

• Euro May Fall on ECB Easing Bets as CPI Drops to Lowest in 4 Years

• US Dollar May Rise if Yellen Commentary Maintains Hawkish Overtones

• Aussie Dollar Underperformed in Asia, Profit-Taking a Possible Driver

March’s preliminary Eurozone CPI report headlines the economic calendar in European hours. Expectations call for the headline year-on-year inflation rate to decline to 0.6 percent, the lowest since November 2009.

Leading cues from March PMI data seemingly bolster the probability of a soft outcome. Weak price growth readings may fuel concerns about continued disinflation and drive speculation about a near-term expansion of ECB stimulus efforts ahead of this week’s ECB policy announcement, weighing on the Euro.

Later in the day, the spotlight will shift to scheduled remarks from Federal Reserve Chair Janet Yellen. She is set to speak at the National Interagency Community Reinvestment Conference. While it is unclear that Yellen’s speech will contain content pertinent to investors’ outlook for Fed monetary policy, the possibility that this is the case exists.

With that in mind, traders will listen carefully to glean the tone of the central bank chief’s rhetoric for confirmation of the relatively hawkish tilt noted following the March FOMC meeting. Needless to say, the presence of such cues is likely to bode well for the US Dollar.

The Australian Dollar underperformed in otherwise quiet overnight trade, sliding as much as 0.2 percent on average against its leading counterparts. A discrete trigger for the move was not readily apparent, hinting weakness may have reflected profit-taking after the Aussie outpaced its G10 FX counterparts to add 1.8 percent against the greenback last week.

New to FX? START HERE!

Asia Session

European Session