EUR: Limited impact of France budget news Spain releases its March CPI estimates today, and while generally not being a major driver for markets, material deviation from consensus has generated market volatility in the past. Headline inflation is expected to rise back above 3.0%, but core should tick lower from 3.5% to 3.4%. Next up on the inflation release schedule in the eurozone are France and Italy on Friday, followed by Germany and the whole eurozone aggregate after the Easter break. France hit the headlines yesterday as it reported the 2023 deficit at 5.5% of GDP, substantially above the 4.8% seen in 2022 and higher than the government target of 4.9%. As discussed by our colleagues here, this was mostly due to a decline in revenues (like corporate tax, VAT, income tax), as well as softer GDP in 2H23. We estimate that the deficit may well exceed 5% again in 2024. The euro has – however – remained shielded from the news as OAT spreads didn’t move much. Fiscal concerns should rise again as we head into the September budget in France, but we think the European Central Bank will be well into its monetary easing process, making the general environment for eurozone bonds quite favourable. Looking again at this week, we do not see major catalysts for a break higher or lower in EUR/USD unless US core PCE surprises (consensus is clustered at 0.3% month-on-month). We think the pair can stabilise around 1.0850.