German Inflation Data Dissapoints

The euro fell to $1.3539 at 6:00 GMT on Friday morning after eurozone data did nothing to diminish speculation that the European Central Bank would be forced to act at its policy meeting next week. German inflation data missed analyst expectations and renewed fears that the eurozone was headed for a period of deflation. According to Bloomberg, Germany reported a 1.2 percent annual inflation rate in January, below analyst expectations. Prices in the bloc's largest economy fell 0.7 percent on the month. Although German prices usually dip following the holidays, January's figure was the nation's steepest decline in four years. Following the release, Barclays trimmed its annual estimate for eurozone consumer price increases from 0.9 percent to 0.8 percent.Later on Friday, all eyes will be on the eurozone's actual inflation data, due out at 10:00 GMT. The data will heavily influence ECB President Mario Draghi's course of action at the bank's upcoming policy meeting next week. At previous meetings, the ECB pledged to take action if the medium-term outlook for inflation looks slow. So, Friday's inflation data has the potential to drag the common currency even lower.The euro was also under pressure from a stronger dollar as the greenback continued to rise on more positive US data. US GDP data released on Thursday showed that the nation's GDP grew at an annual rate of 3.2 percent in the fourth quarter. The solid GDP figures coupled with a rise in consumer spending helped propel the greenback to a new weekly high.