German wholesale prices pick up

The rise in producer prices boosted the euro

German inflation is expected to accelerate after wholesale prices rose in March at their quickest annual rate since December 2006.

Producer prices, an early measure of consumer price pressures, rose 4.2% year-on-year, boosted by a rise in energy costs, official data showed.

Analysts said the data reinforced views that the European Central Bank would keep interest rates unchanged.

Expectations of higher prices pushed the euro up against the dollar.

"The main driver [of the euro] is interest rate differentials and it looks as though the ECB won't cut in the first half of the year," said Kikuko Takeda, a senior currency economist at BTM-UFJ.

European interest rates are at a six-year high of 4% at a time when other central banks are cutting borrowing costs.

The euro benefits from relatively high eurozone interest rates because investors are attracted by better yields on euro bank deposits and other euro-denominated investments.