The Euro Stabilizes And The Dollar Stabilizes Ahead of Inflation Data

The price of the euro settled on Wednesday, at a level below its highest level in three weeks after Christine Lagarde, President of the European Central Bank played down the possibility of a significant rate hike.

The dollar stabilized a day before the US consumer price index data, which may provide new indications of the pace of US monetary policy tightening.

Last week’s hawkish tone from the European Central and the US Federal Reserve surprised the markets and pushed bond yields higher in the Eurozone and the US with growing expectations that interest rates will be hiked faster than expected.

But Lagarde said on Monday that there was no need for excessive monetary tightening in an attempt to cool expectations after she indicated last week a possible rate hike this year.

The euro rose slightly by 0.1 percent, recording 1.1425 dollars by 0850 GMT, after its gradual retreat from its peak of 1.1483 dollars on Friday.

The dollar index, which measures its price against six currencies, also fell slightly by 0.1 percent to 95.504, after rising above its lowest level in two and a half weeks at 95.136, which it recorded on Friday. The index hit its highest level since July 2020, at 97,441 at the end of last month.

Analysts polled by Reuters had expected US inflation data expected on Thursday to show a 7.3 percent rise in consumer prices on an annual basis in January.