Euro Drops After Eurozone Inflation Data, ECB Member Schnabel's Comments

(RTTNews) - The euro fell against its major counterparts in the European session on Thursday, as the region's inflation held steady in August and German policymaker Isabel Schnabel remarked that it is impossible to predict a peak rate or the duration of the tightening phase as the central bank has adopted a data-dependent approach for each policy rate-setting session.

Flash data from Eurostat showed that Eurozone inflation remained unchanged at 5.3 percent in August, while the rate was forecast to slow to 5.1 percent. The 5.3 percent was the lowest since January 2022.

Excluding energy, food, alcohol and tobacco, core inflation slowed to 5.3 percent, in line with expectations, from 5.5 percent a month ago.

Eurozone medium term inflation outlook is characterized by an exceptionally large degree of uncertainty that could increase due to the adverse supply shocks and climate-related risks, and hence, policymakers cannot commit to future actions, Schnabel said.

"We cannot predict where the peak rate is going to be, or for how long rates will have to be held at restrictive levels," the policymaker added.

"We can also not commit to future actions, meaning we cannot trade off a need for a further tightening of monetary policy today against a promise to hold rates at a certain level for longer."

The euro fell to 1.0857 against the greenback and 0.9571 against the franc, from an early high of 1.0939 and a fresh 2-week high of 0.9603, respectively. The euro is seen finding support around 1.06 against the greenback and 0.94 against the franc. The euro touched 158.41 against the yen and 1.4713 against the loonie, setting 2-day lows. The euro may locate support around 148.5 against the yen and 1.44 against the loonie.

Against the pound, the euro dropped to a 6-day low of 0.8561. If the currency drops further, it may find support around the 0.84 area.

The euro declined to 1.8256 against the kiwi and 1.6788 against the aussie, reversing from an early 9-day high of 1.8378 and a 3-day high of 1.6880, respectively. The euro is likely to find support around 1.78 against the kiwi and 1.63 against the aussie.