Eurozone Inflation Drops to 4-Month Low as Rate Cut Bets Intensify

Euro Zone inflation dropped to a 4-month low of two.2%, growing bets on an ECB charge lower in April.
Uncertainty surrounds the inflation outlook attributable to US tariffs and the EU’s response.
The DAX index faces a “precarious state of affairs” technically, with the potential for a correction forward of tariff bulletins. What’s subsequent for the DAX?

within the Euro Space dropped to 2.2% in March 2025, its lowest degree since November 2024 and slightly below the anticipated 2.3%, in line with early estimates.

Costs for providers grew extra slowly (3.4% in comparison with 3.7% in February), and vitality prices fell (-0.7% in comparison with a 0.2% rise earlier than). Nevertheless, inflation stayed the identical for non-energy items (0.6%) and processed meals, alcohol, and tobacco (2.6%), whereas unprocessed meals costs jumped considerably (4.1% in comparison with 3.0%).

, which excludes meals and vitality, additionally eased to 2.4%, barely beneath the two.5% forecast and its lowest since January 2022. Month-over-month, elevated by 0.6% in March, up from a 0.4% rise in February.

Inflation Outlook Shifting Ahead

The short-term outlook for inflation is very unsure. US tariffs may decrease eurozone inflation by decreasing exports and slowing financial development. These tariffs additionally improve the provision of products within the eurozone because the US makes it tougher to entry their market. Nevertheless, if the European Fee retaliates, it may push greater since these measures act like a home tax that buyers will partly bear.

Final yr in March, ECB President Lagarde hinted at potential charge cuts, saying, “We’ll know slightly extra in April and much more in June.” This yr, by April, she’ll have rather more readability on US tariffs on European items and the EU’s deliberate response, which can be mentioned on the April ECB assembly. This can play an enormous function in deciding future rates of interest.

One concern is that the job market remains to be very tight, with hitting a report low of 6.1% in February, in line with Eurostat information launched on Tuesday. For now, immediately’s lower-than-expected inflation helps the case for an additional charge lower to deliver charges nearer to impartial.

Markets at the moment are pricing in round an 82% probability of a 25 bps charge lower on the ECB assembly on April 17.

ECB Curiosity Charge Expectations

Supply: LSEG0

Technical Evaluation – DAX Index (DAX 40)

from a technical standpoint, the index has loved a stellar 2025 YTD.

Nevertheless, current technicals have urged {that a} potential correction could also be within the offing with a possible double high sample forming at current highs. A break of the neckline has but to materialize nonetheless, and immediately’s weaker inflation information has helped with that.

Nevertheless, a every day candle shut beneath the 22405 deal with (neckline) may result in an accelerated selloff within the DAX simply as President Trump prepares his tariff bulletins.

This leaves the DAX in a precarious state of affairs at current, with quick resistance resting at 22886, 23200 and naturally the current highs at 23454.

Fast help rests at 22405, 21758 earlier than the 200-day MA comes into focus at 21164.