EUR: Inflation test The eurozone CPI data is published today after German figures surprised slightly the upside yesterday. The harmonised CPI print showed inflation in Germany rebounding from 2.3% to 2.4% year-on-year (consensus was 2.3%), although the core measure continued to grind lower. As discussed by our economics team here, those numbers signal how the last mile in the European Central Banks's inflation battle may be the longest. We currently expect CPI to remain sticky in Germany into next month, with the headline rate potentially rebounding all the way to 3%. That – and probably today’s eurozone-wide CPI – should not be enough to cast real doubts on a June ECB cut, which still matches the direction of members’ communication over the past few months. Instead, it may suggest a less clear path for policy beyond June, especially considering sticky inflation in the US. We think slightly higher inflation in the eurozone can give some support to EUR/USD as the very wide short-term swap rate differentials may slightly tighten. Later this week, we see the Fed event (tomorrow) as carrying downside risks for EUR/USD, although payrolls on Friday might miss the 240k consensus and hit the dollar. Ultimately, we would not be surprised to see EUR/USD still trading around the 1.07 handle at the end of this week.