FXStreet (Córdoba) - Tomorrow, the inflation report from the Eurozone will be release. Analysts from Danske Bank, expect an increase to 0.5% y/y, from 0.2% and warned that inflation is priced too pessimistically. Key Quotes: “German HICP inflation increased to 0.4% y/y in January, from 0.2% y/y in December, in line with our estimate and consensus. German CPI was a bit higher than estimated, as it increased to 0.5% y/y, from 0.3% y/y (consensus 0.4% y/y).” “We expect the euro HICP inflation figure, due for release tomorrow (Friday 01/29) at 11:00 CET, to increase to 0.5% y/y, from 0.2% (consensus 0.4%). At the very short end, the inflation market is pricing HICP inflation excluding tobacco at 0.2% in January and throughout 2016 inflation is priced too pessimistically, in our view. Notably, we expect core inflation to increase to 1.1% y/y in January, from 0.9% y/y in December (consensus 0.9%).” “The January inflation print will be based on updated item weights and given the decline in energy prices in 2015, the weight of energy prices should be lowered. This said, in our opinion, putting a smaller weight on the drag from energy prices should not result in significantly higher inflation.” “The market is pricing inflation very low and the dovish stance at the ECB meeting in January, which supported risky assets, has not lifted the 5Y5Y inflation expectation, which is currently trading around 1.55%.” “At the front-end of the curve, inflation is also priced very subdued in our view. In order for the inflation pricing to be consistent with the oil forward market, core inflation needs to go considerably lower. As mentioned above, there is a risk of some second-round effects of the oil price decline but, we do not look for a large fall in core inflation” For more information, read our latest forex news.