Euro Holds Above $1.175 as Inflation Picks Up and ECB Signals Steady Rates

The euro traded above $1.175 after Eurostat data confirmed an acceleration in Eurozone inflation in September, while the US dollar weakened following the start of the first US government shutdown in seven years.

Inflation rose to 2.2%, up from 2.0% in August and slightly above the European Central Bank’s mid-point target, as energy prices fell at a slower pace.

The data reinforced expectations that the ECB will hold off on cutting rates for now.

ECB Vice President Luis de Guindos said Tuesday that “the current level of interest rates is adequate,” adding that decisions will continue to be taken “meeting by meeting.” On Monday, board member Gabriel Makhlouf remarked that “we are near the bottom of the easing cycle.” This release marks the final inflation reading before the ECB’s October 30 meeting, where rates are expected to remain unchanged until new forecasts are presented in December.