Euro Weakens Against Dollar Amid Inflation Concerns and Rate Speculation

The euro is weakening against the US dollar, hitting a new yearly low. The euro fell to US$1.1338 during US trading on Tuesday. It briefly dipped below US$1.13, reaching a daily low of US$1.1296 on Wednesday. Several factors contribute to the euro's weakness. Lower-than-expected inflation in France is weighing on the currency. French inflation was only 0.6 percent in May, below the European Central Bank's target. Analysts anticipate further interest rate cuts by the ECB. Strong US economic data currently benefits the US dollar. Increased consumer confidence in May reduces the likelihood of a near-term rate cut by the Federal Reserve.