Euro Slips Below $1.35 Ahead Of ECB Meeting

The euro began February below $1.35 after weak inflation data and stubbornly high unemployment figures added to concern that the bloc's recovery would be a slow process. The common currency traded at $1.3495 at 5:50 GMT on Monday morning as investors looked ahead to the upcoming European Central Bank meeting. Worries that the eurozone could soon enter a period of deflation were reignited last week after data showed that the 17 nation bloc's inflation rate was below forecasts yet again in January.

reported that eurozone consumer prices rose by just 0.7 percent in January, far below economists' expectations of a 0.9 percent increase. In October, eurozone consumer prices also fell to a 47 month low of 0.7 percent, at which time the European Central Bank stepped in and lowered its key interest rate in an effort to combat deflation. With the bank's February policy meeting approaching on Thursday, many see the January inflation data putting pressure on the bank members to further intervene. The bank has been adamant in saying that a period of deflation is unlikely scenario, but the latest data could push it to lower its refinancing rate to between 0.10 and 0.15 percent. With so much speculation around the ECB taking an even more accommodative stance, the euro has come under pressure. Also worrying was unemployment data from the bloc, which indicated that the region's jobless rate was stuck at an uncomfortably high level. Eurozone unemployment came in at 12 percent annually in December, unchanged from November's reading. However, the number of jobless people in the eurozone declined by 129,000, the largest monthly drop since the beginning of the region's financial crisis.