Both the U.S. dollar and the euro held firm on Wednesday as investors assess the latest statements from the European Central Bank (ECB) while awaiting the release of key U.S. inflation data.
French ECB policymaker Francois Villeroy de Galhau stated on Wednesday that interest rate hikes from the central bank will most likely need to persist in the coming months. In addition, the ECB confirmed that wage pressures are likely to persist during this time period, with governing council member Mario Centeno adding that he only expects European inflation to subside by March at the earliest.
U.S. investors are awaiting incoming inflation data in order to gain more insight into what interest rate policy to expect from the Federal Reserve going forward. Fed Chair Jerome Powell avoided shedding light on any policy decisions during a panel discussion in Stockholm on Tuesday.
While the dollar gained 0.2% to 103.45 against a basket of currencies including the euro, the euro climbed to $1.0732, edging closer to its strongest level against the greenback over the past seven months.
Since hitting a 20-year in September, the dollar has lost 12% against the euro.