The Euro is holding steady against the US Dollar and Sterling after weakening earlier in the session as investors grow cautious ahead of this week’s bout of Central Bank policy meetings. The currency found some support after the Eurozone’s latest inflation data showed it slowed less than economists had been expecting.
According to the European Union’ statistics office in Luxembourg, annual price growth in the single currency bloc was 1.7% in March, down from the 1.8% in February. Economists had been expecting a decline of 1.6%.
Energy prices increased 1.7% in March after a 3.9% gain a month earlier, today’s report showed. Prices of food, alcohol and tobacco rose 2.7%, the same as in February, while the cost of services increased 1.9% after a 1.5% gain in the prior month.
The European Central Bank is due to meet tomorrow to decide on whether to cut interest rates or maintain them at the record low level of 0.75%. The possibility of the bank making a cut has increased following a month in which the troika botched the Cyprus bailout and saw the Euro plummet to its lowest level in a year against the US Dollar.
Disappointing economic data out of the region including a new record high in unemployment could spur the bank to take action as it seeks a way to get the region’s economy to grow by any means.
“On paper, you could say there’s room for an interest-rate cut,” said Thilo Heidrich, an economist at Deutsche Postbank in Bonn. “On the other hand, you could say that would achieve nothing and would only use up some ammunition in case the debt crisis really worsens.”
As of 11:00am
The Euro to Pound Sterling exchange rate is currently trading in the region of 0.8491
The Euro to US Dollar exchange rate is currently trading in the region of 1.2825
The Euro to Australian Dollar exchange rate is currently trading in the region of 1.2240
The Euro to New Zealand Dollar exchange rate is currently trading in the region of 1.5216
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