ECB to reiterate commitment to aggressive easing

EUR should remain under pressure this week as the ECB likely reiterates its commitment to its new Public Sector Purchase Programme (PSPP) and March inflation data confirm the need for this aggressive monetary policy easing. 

The ECB Governing Council will likely leave policy unchanged (Wednesday), as widely expected, and focus on the impact of its past policy decisions after one month of the expanded QE implementation. 

Final readings of euro area March inflation (Friday) should be confirmed at -0.1% y/y (+1.1% m/m) for headline and +0.6% y/y (1.3% m/m), in line with the consensus forecast.

Activity data are likely to show continued improvement with euro area IP (Tuesday) increasing 1.0% m/m in February (consensus: 0.4%) consistent with latest business surveys, which point to some improvement in manufacturing activity.