The euro slipped just below $1.17, its weakest level since December 9, as softer inflation in the Eurozone tempered expectations of an ECB rate hike by year-end. EUROSTAT data showed consumer price inflation eased to a four-month low of 2% in December, bringing the rate back to the ECB’s midpoint target. Core inflation, which excludes energy, food, alcohol, and tobacco, fell to 2.3%, slightly below market expectations of 2.4%. Across Europe’s largest economies, price growth either eased or remained broadly stable. In separate news, German retail sales dropped 0.6% in November, marking the sharpest decline since May and missing forecasts for a 0.2% gain. Meanwhile, Germany’s labor market showed little momentum heading into the new year. As a result, money markets now assign almost zero probability of an ECB rate hike by December 2026, reinforcing expectations that interest rates are likely to stay on hold for the foreseeable future.