Softer German inflation reduces expectations for further European Central Bank rate hikes, weighing on the euro.
The EUR/USD pair fell to near 1.1410 in early Asian trading on Wednesday, extending losses after weaker-than-expected German inflation data. The decline reflects diminished bets on aggressive monetary tightening by the European Central Bank.
German inflation figures released earlier this week came in below forecasts, easing pressure on the ECB to continue raising rates. Markets had previously priced in a more hawkish stance, but the softer data has shifted expectations.
The euro’s retreat highlights growing concerns over economic momentum in the eurozone, with traders reassessing the likelihood of further policy action.