EUR/USD Drops Near $1.26 as Low Inflation Places Heat on ECB

The euro languished near a fresh two-year trough early on Wednesday, having come under fire as a further slowdown in euro zone inflation intensified pressure for more stimulus from the European Central Bank.

The common currency fell as far as $1.2571 before managing a bounce to $1.2629. That ended a dismal month in which it skidded 3.82 percent – its biggest decline in over two years.

Data on Tuesday showed annual inflation cooled to 0.3 percent in September, from 0.4 percent, well below the ECB’s target of just under 2 percent.

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