The euro experienced a decline, reaching its lowest level since December 9th, primarily influenced by anticipation surrounding the US jobs report and potential tariff-related rulings. This movement reflects a divergence in expectations regarding monetary policy between the US Federal Reserve and the European Central Bank (ECB).
- The euro fell to $1.164, its weakest level since December 9.
- US economic indicators suggest a strong labor market, diminishing the chances of near-term Fed rate cuts.
- Eurozone consumer price inflation slowed to 2% in December, returning to the ECB’s midpoint target.
- Core inflation in the Eurozone eased to 2.3%, slightly below forecasts.
- Price growth across the region’s largest economies either softened or remained broadly stable.
The currency’s depreciation suggests a challenging period, particularly as the economic data points towards a less aggressive monetary policy stance from the ECB compared to the potential actions of the Federal Reserve. Slower inflation and stable price growth could mean fewer incentives for the ECB to tighten its monetary policy, making the euro less attractive to investors seeking higher returns.