Euro hovers above parity against USD Ahead of US inflation data

The euro hovered above parity with the US dollar on Wednesday as traders focused on US data due later on Wednesday that is expected to show inflation at a 40-year high.

European stocks witnessed a decline and the currency markets were calm in early European trading, with the dollar index rising by 0.1 percent to 108.33.

The euro fell 0.2 percent to 1.00375 by 0804 GMT.

On Tuesday, it fell to $1.00005 on the widely used (Electronic Brokerage Services) platform.

Market watchers will focus on US CPI data due later on Wednesday. Economists expect headline inflation in the United States to accelerate to 8.8 percent on an annual basis in June, the highest level in four decades.

Analysts said that higher-than-expected inflation would bolster expectations that the Federal Reserve will raise interest rates and push the dollar higher, which could break the parity between the euro and the dollar.

The euro has fallen nearly 12 percent this year and hit a 20-year low on Tuesday, as the war in Ukraine triggered an energy crisis that hurt growth prospects on the continent.

Against the British pound, the euro fell about 0.1 percent.

As for the British pound, it rose 0.2 percent to $1.19055.

The Japanese yen fell against the dollar to 127,075, after being battered in recent months by the loose monetary policy of the Bank of Japan.

The Australian dollar rose 0.2 percent to $0.67,700.

Its New Zealand counterpart rose 0.1 percent to $0.6134, after receiving little support from the central bank’s 50 basis point interest rate hike.