Eurozone Inflation Expected to Remain Elevated Despite ECB Efforts

The Eurozone inflation is expected to stay above target for a longer period, according to ECB officials. The recent closure of the Bab el-Mandeb Strait and the Strait of Hormuz due to the war between the US and Iran has led to elevated oil prices, boosting inflation expectations.

ECB officials have been warning of prolonged upside inflation risks, but rule out the risk of second-round effects on wages and services. ECB President Christine Lagarde said that 'Risks to inflation tilted to the upside' and added that 'Energy shock likely to keep inflation well above target into first half of 2027.'

Meanwhile, the US Dollar Index (DXY) is slightly down to near 101.37 after a strong upside move the previous day. The USD Index gained sharply on Thursday due to the revival in hawkish Federal Reserve interest rate hike expectations.