The euro experienced a dip, falling below $1.17 to its lowest level since early December. This weakening is attributed to lower-than-expected inflation figures within the Eurozone and sluggish retail sales in Germany. These factors have significantly dampened expectations of an imminent interest rate hike by the European Central Bank (ECB). The data suggests a more dovish stance from the ECB for the foreseeable future.
- The euro slipped below $1.17, reaching its weakest level since December 9.
- Eurozone consumer price inflation eased to 2% in December, a four-month low.
- Core inflation fell to 2.3%, below market expectations.
- German retail sales dropped 0.6% in November, the largest decline since May.
- The probability of an ECB rate hike by December 2026 is now considered almost zero.
The current economic data paints a picture of a Eurozone economy struggling with inflationary pressures and sluggish growth. This suggests that the currency is likely to remain under pressure in the short term. The lack of expectation for an interest rate increase in the near future means that the euro lacks a key support mechanism.