Weaker inflation in the Euro-zone reduces expectations for another ECB rate hike, pressuring the currency pair.
EUR/USD fell below the 1.1400 support level after softer Euro-zone inflation data reduced confidence in further European Central Bank tightening. The decline reflects growing market skepticism about another ECB rate hike, as yields retreat.
Prior to this move, markets had priced in a higher probability of additional tightening, but the ECB’s milder inflation scenario now appears more likely. This shift eases pressure on policymakers to act aggressively, weighing on the euro.
The currency pair’s drop aligns with broader sentiment ahead of U.S. nonfarm payrolls data, which could further influence monetary policy expectations.