LONDON, June 29, Reuters -- The euro was steady on Wednesday after falling to a six-day low, due to the release of conflicting inflation data in Germany and Spain, which created a difficult backdrop for European Central Bank policymaking.
The European common currency declined in early London trading after data showed that June prices in the German state of North Rhine Westphalia NRW had been 0.1% lower than in May.
The euro trimmed its losses after data showed that Spanish 12 month inflation had increased to 10.2% in June, up from 8.7% in May and surpassing 10% for the first time since April 1985, which has led to a flattening of those losses.
Jane Foley, head of FX strategy at Rabobank in London, said that the strength of Spanish CPI inflation data had undone the pressure on the euro. She said that after the - 0.1% drop in Germany's June CPI number, the market began to question the hawkishness of the ECB going forward.
Three major central bankers spoke at the ECB Forum in Sintra, Portugal, as well as a panel at the national inflation data for Germany due at 1200 GMT.
The ECB President Christine Lagarde, U.S. Federal Reserve Chairman Jerome Powell, and Bank of England Governor Andrew Bailey will speak at 1300 GMT.
On Tuesday, Lagarde gave no new insight on the path for European interest rates at the ECB's annual forum.
The ECB is expected to raise interest rates in July for the first time in a decade, following its global peers, to try to cool rising inflation, but economists are divided about the magnitude of the hike because of the rising cost of borrowing, which could damage more growth prospects.
According to a separate set of data released on Wednesday, euro zone economic sentiment fell by slightly less than expected as consumers and retail trade became more downbeat but spirits among the industrial and services sectors improved, causing some of the ECB worries about the economy.
The euro dropped to $1.0525 against the dollar at 1105 GMT, after dipping as low as $1.0486 earlier in the day.
The dollar index, which measures the dollar against six counterparts, went up after investors were seeking safety in the U.S. assets as stocks declined globally due to the mounting risk of a recession.
The safe-haven dollar index was 0.02% higher than 104.5, but it stayed below a two-decade high struck two weeks ago.
The Swiss franc was up 0.65% compared to the euro to 1.0001, its highest level against the single currency since March.
European equities fell after heavy Wall Street losses on Tuesday, after a steep drop in U.S. consumer confidence sparked concerns about an economic slowdown at a time when the U.S. Fed is rushing to raise interest rates to corral inflation.