The euro was hovering just above parity with the U.S. dollar on Wednesday while traders focused on U.S. data due later in the session that is expected to show inflation at a 40-year high.
European stock markets were in the red and currency markets were calm in early European trading, with the dollar index up by around 0.1% at 108.33 .Register now for FREE unlimited access to Reuters.comOn Tuesday, it had dropped as low as $1.00005 on the most widely used Electronic Broking Services' dealing platform and touched $1 on Reuters dealing overnight.
Higher-than-forecast inflation would reinforce expectations of Federal Reserve interest rate hikes and push the dollar higher - potentially causing euro-dollar to break parity, analysts said. Derek Halpenny, head of research at MUFG, said in a client note that risk-off market moves due to increased global recession risks have "further to run".
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