The euro rose for the third day in a row on Wednesday, coming off a 20-month low last week, as euro zone inflation jumped to a new record last month fuelling bets the central bank would raise interest rates sooner than anticipated.
People should keep in mind that at 5.1% in January, price growth is more than twice the European Central Bank’s 2% target.
The single currency fell about 8% in three months. Investors and analysts expected that the ECB would be the last major central bank to raise interest rates.
The euro gained 0.45% against the U.S. dollar to $1.3245, touching its nine-day high. The single currency rose as investors assessed the chances that the ECB might signal a faster path for policy tightening at its meeting on Thursday.
In the meanwhile, the U.S. dollar retreated from a 19-month high. The greenback reached its highest point against a basket of currencies last week. The U.S. currency rose as Federal Reserve officials cautioned against potentially aggressive rate increases this year.
The U.S. currency declined for a third day its peers, slipping 0.4% to 95.875.
The British pound gained 0.3% to a 12-day high against the U.S. dollar to $1.3571. The pound rose ahead of a Bank of England meeting on Thursday.
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