The euro fell against the dollar on Thursday after Eurozone inflation eased to 8.5% in February from 8.6% a month earlier.

This comes after a recent spate of strong national readings, including higher-than-expected inflation in Germany last month, had investors on edge. While the latest data was not as high as initially feared, investors remained cautious in their reaction.

The European Central Bank (ECB) is expected to continue raising interest rates, with investors predicting a combined 100 basis point hike in March and May, followed by another 50 basis points by the end of the year. This would bring the ECB’s deposit rate to around 4.1%.

The dollar index, which measures the U.S. currency against six others, rose 0.43% to 104.82 on Thursday, boosted by a rise in U.S. Treasury yields and comments from Federal Reserve official Neel Kashkari. Kashkari left the door open to a 50-basis point rate hike at the Fed’s next meeting in March.

Meanwhile, sterling was held back by comments from Bank of England Governor Andrew Bailey, who said “nothing is decided” on future rate increases. This caused traders to trim back bets on higher rates, resulting in a 0.46% drop to $1.1970.

Investors are also closely watching China’s National People’s Congress meeting, which began on Sunday. The meeting is expected to provide guidance on policy support for the post-COVID recovery. “Yesterday’s positive surprise in the PMIs for China in February are a positive for mining commodity prices and the currencies of countries that export them,” said Commonwealth Bank of Australia’s head of international economics, Joe Capurso.

Finally, Bitcoin slipped 1% to $23,400 on Thursday as trouble at crypto lender Silvergate weighed on the mood. Later in the day, euro zone employment and central bank minutes are due, as well as U.S. jobless claims data.

Overall, investors remain cautious in their reaction to economic data as they continue to navigate the uncertain post-pandemic recovery.