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Euro weakens as investors favor USD amid hawkish Fed and ECB's anti-inflation measures.

The euro has dropped to its weakest level since January 5th, trading around $1.05, as investors shift towards the US dollar.

This move comes amid expectations that the Federal Reserve will maintain its hawkish monetary policy for an extended period. In January, the Personal Consumption Expenditure (PCE) prices in the US rose higher than expected, while the minutes from the Fed's latest policy meeting, released earlier this week, suggested that the central bank would remain committed to its rate hike path until inflation was under control. Meanwhile, the European Central Bank (ECB) is expected to continue raising interest rates, following better-than-expected data revealing that Eurozone output growth accelerated in February to a nine-month high, boosted by enhanced supply chains and stronger demand. At its February meeting, the ECB raised interest rates by 50 basis points to the highest levels since late 2008, signaling one more increase of the same magnitude next month and reaffirming its commitment to battling inflation.

According to Trading Economics' global macro models and analysts, the Euro Dollar Exchange Rate - EUR/USD is predicted to trade at 1.04 by the end of this quarter, and the forecast estimates it will trade at 0.99 in 12 months.

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