EUR/USD below 1.36 as CPI Fuels ECB Bets

The euro slid the most in six months versus the dollar after the inflation rate in the region unexpectedly cooled, fueling speculation the European Central Bank will cut interest rates to spur the economy.

The shared currency fell against most of its 16 major peers as separate data showed unemployment in the euro area climbed to a record 12.2 percent. The yen pared its first gain in five days versus the dollar as a U.S. business barometer unexpectedly jumped. Brazil’s real dropped the most in more than two months as the nation’s budget deficit widened more than forecast.

“With inflation already running well below the ECB’s 2 percent target, any cooler-than-expected inflation reading is probably going to set off alarm bells that will result in the ECB becoming increasingly worried about the strength of the euro,” Omer Esiner, chief market analyst in Washington at the currency brokerage Commonwealth Foreign Exchange Inc., said in a phone interview.

Bloomberg

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