The euro slipped against the U.S. dollar on Thursday, breaking an eight-day rally, even as revised data showed Eurozone inflation accelerating more than first estimated ahead of a key European Central Bank (ECB) meeting.
The EUR/USD pair traded around 1.1770, down 0.24% on the day, as the U.S. dollar steadied near a six-week low. The dollar’s broader rebound kept pressure on the single currency despite stronger inflation figures out of the bloc.
Eurozone inflation revised higher
Revised Eurozone data showed consumer prices rising faster than initially reported:
- The Harmonized Index of Consumer Prices (HICP) increased 1.3% month-on-month in March, up from 0.6% in February and above the earlier 1.2% estimate.
- On a yearly basis, headline inflation was adjusted to 2.6%, compared with a prior 2.5% estimate, marking the highest reading since July 2024.
- Core inflation, excluding energy and food, edged down to 2.3% from 2.4% in the previous month, signaling a slight easing in underlying price pressures.
Energy costs were the main driver of the headline increase. Eurostat data showed energy prices in the euro area jumping 7% on a monthly basis in March, underlining the impact of global commodity trends on regional price dynamics.
Policy expectations ahead of ECB meeting
The inflation data land just before the ECB’s policy meeting on April 29–30, where officials will reassess their stance in light of rising prices and still-fragile growth.
ECB President Christine Lagarde repeated that the central bank will keep flexibility on interest rates, avoiding any firm commitment toward policy tightening. Bank of France Governor François Villeroy de Galhau said it was too soon to discuss a rate increase in April, stressing the need for additional data before changing course.
Despite the cautious tone, market pricing continues to anticipate a move later this year. Futures contracts are signaling an almost full probability of a 25-basis-point rate hike by June, with scope for another increase before year-end.
Traders are now focused on comments from ECB officials Joachim Nagel and Philip Lane due later in the day, which may offer further clues on how the central bank interprets the latest inflation surprise and the likely timing of any policy shifts.
Dollar stabilizes on mixed U.S. data
The U.S. dollar index hovered around 98.25 after touching an intraday low of 97.83, showing a modest rebound but remaining near its weakest level in more than a month. The move reflects ongoing reassessment of the U.S. growth and inflation outlook.
Recent U.S. releases delivered a mixed picture:
- Initial jobless claims fell to 207,000, beating forecasts of 213,000 and pointing to continued resilience in the labor market.
- Industrial production dropped 0.5% in March, compared with expectations for a 0.1% increase, signaling softer activity in the manufacturing and industrial sectors.
- The Philadelphia Fed’s manufacturing index rose to 26.7 in April from 18.1, indicating stronger regional factory activity and partly offsetting the weaker production headline.
These data points helped the dollar stabilize after several sessions of pressure, limiting the euro’s upside despite the stronger Eurozone inflation print.
Cross-currency performance
While the euro eased against the U.S. dollar and was slightly lower versus the Japanese yen, it gained ground elsewhere.
The euro strengthened most notably against the New Zealand dollar during the session. A daily performance table showed the euro up 0.38% against the New Zealand dollar, highlighting that the pullback was largely focused against the greenback rather than broad-based euro weakness.
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