The euro experienced a boost, strengthening to $1.17 following the release of national inflation reports from the Euro Area’s four largest economies. The reports revealed rising prices, bolstering expectations that the European Central Bank (ECB) will likely maintain current interest rates in the short term. Concurrently, the dollar weakened due to growing apprehension regarding a possible US government shutdown, further contributing to the euro’s upward trajectory.
- The euro strengthened to $1.17.
- Inflation rose in Germany (2.4%), France (1.2%), and Spain (2.9%). Italy remained steady at 1.6%.
- Euro-zone inflation is expected to reach a five-month high in September, with consumer prices up 2.2% year-on-year.
- Higher energy and airfare costs are driving the increase.
- The ECB is likely to keep rates unchanged at the October 30th decision.
- Rates are likely to remain unchanged until the December meeting.
- The dollar weakened due to concerns over a potential US government shutdown.
The convergence of factors, especially increased inflation across major Eurozone economies, has led to positive market sentiment towards the euro. The data suggests the ECB is likely to hold steady on interest rates, which offers a degree of stability to the currency. Coupled with the dollar’s weakness, the euro has found support to appreciate in value.