The euro strengthened to $1.17 after national inflation reports showed rising prices across the four largest Euro Area economies, reinforcing expectations that policymakers will avoid cutting interest rates for now.
Germany’s inflation jumped to 2.4%, above the 2.3% forecast, while France (1.2%) and Spain (2.9%) also saw faster price growth, and Italy remained steady at 1.6%.
Euro-zone inflation is likely to have reached a five-month high in September, with consumer prices up 2.2% year-on-year, the largest increase this year, driven by higher energy and airfare costs.
Although some factors are typically ignored by the ECB, a pickup above the 2% target may encourage officials to maintain current borrowing costs.
This is the last reading before the ECB’s October 30 decision, with rates likely unchanged until the December meeting when new forecasts are available.
Meanwhile, the dollar weakened on growing concerns over a potential US government shutdown.