The EUR/USD pair moves slightly higher, trading around 1.1810 during the late Asian session on Friday, as investors await Germany’s preliminary inflation figures for February, including data from its major states.
Germany’s flash Harmonized Index of Consumer Prices (HICP) is projected to rise 0.5% month-on-month, recovering from a 0.1% decline in January. On an annual basis, inflation is expected to hold steady at 2.1%.
However, the German inflation reading is unlikely to significantly alter expectations for the Eurozone’s interest rate path. European Central Bank (ECB) President Christine Lagarde stated on Thursday, during her address to the European Parliament’s Committee on Economic and Monetary Affairs (ECON), that she remains confident inflation will stabilize around the ECB’s 2% target in the near term.
Regarding policy guidance, Lagarde emphasized that interest rate decisions will depend on the evolving inflation outlook and associated risks. She reiterated that the ECB will maintain a data-dependent, meeting-by-meeting approach when determining its monetary policy stance.
On the other side, the US Dollar softens slightly ahead of the release of the US Producer Price Index (PPI) data for January, scheduled for 13:30 GMT. The US Dollar Index (DXY), which measures the Greenback against six major currencies, is trading 0.1% lower near 97.65 at the time of writing.
Market participants will closely analyze the PPI report for fresh insights into inflation trends. Producer price data could meaningfully influence expectations for the Federal Reserve’s policy direction, especially as several Fed officials have recently supported keeping interest rates steady due to persistent inflation risks.
