The euro has fallen more than 0.6 percent against the dollar as investors anticipate a cut in inflation forecasts when the European Central Bank (ECB) meets on Thursday.
The euro zone currency dropped as low as $1.1205 Wednesday morning after Bloomberg reported that the ECB will cut its inflation forecast for 2019. It was trading at $1.1264 prior to the announcement, having closed at $1.1268 on Tuesday.
Though interest rates are expected to remain unchanged when the central bank holds its latest monetary policy meeting, the drop preempts a likely shift in the language used by the bank to assess upcoming economic risks.
The report, which was attributed to unnamed euro-area officials, suggests that the ECB will show consumer-price growth falling to around 1.5 percent over the next three years, down from March predictions which estimated growth of between 1.6 percent and 1.7 percent.
Market watchers will be waiting to hear how these draft projections correspond when President Mario Draghi and his team make their latest announcement in Tallinn tomorrow.
They have a fine line to tread: while economic data suggests that the
"The Council sounds confident enough to upgrade the balance of risks to growth, but the conviction in inflation is not there yet, with the May flash inflation print doing nothing to change this," Mark Wall, chief economist at Deutsche Bank Research, said in a note.
"However, we would still expect some soft exit expectations management, for example, talking up economic growth and