Euro Dips as Lower Inflation Boosts Odds of ECB Rate Cut

The Euro fell more than 0.4% below $1.108, continuing to retreat from its 13-month high of $1.12, as recent inflation reports provided encouraging news for policymakers ahead of the European Central Bank’s interest rate decision in September. Spain’s harmonized annual inflation rate dropped to 2.4% in August from 2.9% in July, the lowest since August 2023 and below the expected 2.5%. Additionally, lower-than-expected monthly inflation in German states suggests a potential decline in Germany’s overall rate. These data points strengthen the ECB's case for another rate cut on September 12, an outcome that policymakers have indicated is likely. Inflation figures for France, Italy, and the broader Eurozone will be released on Friday.