Consumer inflation in the euro zone picked up to 1.5% in February, as expected, from 1.4% in January, as food and energy costs continued to rise. But underlying inflation, closely watched by the ECB, failed to rise. Price growth excluding food and energy held steady at 1.2%, short of the central bank's overall inflation target of almost 2%.

This may be especially concerning for the ECB, because it has long predicted a pick-up in core inflation. The weak readings suggest a poor understanding of how inflation dynamics changed after the euro zone's debt crisis.

They also give the ECB yet another reason to delay removing any further stimulus, especially since the bloc's growth weakness points to a dire need of more support, not less.

Indeed, the ECB, which just ended a 2.6 trillion EUR bond-buying scheme aimed at pushing down borrowing costs, is already contemplating new support measures, with the first possibly coming at its next policy meeting, on March 7.

Wanting to combat a slowdown in bank lending, the ECB is likely to signal more long-term loans to banks, in the hope of maintaining the flow of credit and investments.

While the bank continues to signal for steady rates only through the summer, few believe rates will rise this year. Markets have already moved their expectations for an increase to mid-2020.

In a separate release, Eurostat reported the euro zone's unemployment rate was 7.8% in January, unchanged from a revised figure a month earlier, although 23k fewer people were unemployed than in December. The 7.8% reading was the lowest since October 2008. December's number had previously been estimated at 7.9%.

EUR/USD's was attracted by Thursday's "cloud twist" circa 1.1413, but it failed to sustain a break above the cloud. Thursday's "bull trap" weighs on the market, which could see spot drift back below the tenkan line which is currently at 1.1348. If bears manage to force that, then the downside threat will grow. We have raised the trailing stop-loss to the entry level.

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