FX.co ★ Euro Steady Ahead of ECB as Inflation Eases

The euro remained close to $1.18, just under last week's peak of $1.20, not seen in over four years, as investors reviewed the Eurozone's January CPI data ahead of the European Central Bank’s (ECB) policy announcement on Thursday. According to EUROSTAT, headline inflation moderated to 1.7% year-on-year, aligning with expectations and marking the lowest level since September 2024. Meanwhile, core inflation decreased to 2.2%, slightly below predictions and reaching its lowest point since October 2021. It is broadly anticipated that the ECB will maintain current interest rates, as officials assess the effects of a stronger euro and inexpensive Chinese imports on the inflation forecast. The central bank has kept its policy unchanged since June, describing its position as stable; however, some officials caution that continued euro appreciation might lead to the reconsideration of rate cuts.