Twin Inflation Tales Reinforce Diverging Paths for Dollar, Euro

Market-derived inflation expectations are climbing on both sides of the Atlantic -- but the strong euro and the weak dollar underscore diverging economic paths that suggest the greenback’s losing streak may gather more pace.

The shared currency climbed to a three-year high against its U.S. counterpart Wednesday, spurred by strong manufacturing data across the region. That’s affirming hopes of a benign uptick in price pressures consistent with consumer demand and wage increases. The greenback, for its part, fell to a three-year low against its major peers after Treasury Secretary Steven Mnuchin endorsed its decline as a fillip for U.S. trade.