Euro Gains Traction Ahead of Inflation Data

The euro gained ground on Tuesday as investors steadied themselves for European inflation figures to remain hot this week while they waited on a speech from European Central Bank (ECB) President Christine Lagarde.

The euro climbed 0.3% in the week’s early trading and at one point went over its 50-day moving average. It last sat at $1.0578 to the US dollar. 

German inflation figures are expected on Wednesday, with data from France expected on Thursday. The eurozone as a whole will provide its data on Friday. ECB chief Lagarde is due to speak at the ECB forum in Portugal this week, with investors keenly awaiting her remarks. 

Expectations of an interest rate hike have the euro trading firmly against the yen at 143.28, close to last week's seven-year high of 144.24. It has also gained traction against the sterling, gaining 1.2% this month to 86.15 pence. 

The euro showed some weakness against the Swiss franc, which strengthened to parity against the common currency after a shock rate hike by the Swiss National Bank earlier in June. 

What does this mean for me? 

Analysts believe the incoming set of inflation data will have a major influence on the ECB's monetary policy going forward. Many expect its interest rate hike cycle to start in July, and inflation will have a big say on how aggressively the ECB acts. FOREX traders should be waiting on news of the ECB’s plans just as keenly.