Aug 29 Reuters The euro fell versus the dollar after German inflation data led investors to increase their bets on the European Central Bank interest rate easing cycle.

Inflation fell in six important German states in August, preliminary data showed on Thursday, suggesting that national inflation could decline noticeably this month.

Spain39;s inflation fell to its slowest pace in a year.

The single currency dropped 0.4 to 1.1077, having traded at 1.1128 before the German figures. It hit a 13month high on Friday at 1.1201.

Money markets priced in 67 basis points of ECB rate cuts in 2024 , from around 63 bps before the data.

Investors now await Friday39;s release of the U.S. core personal consumption expenditures PCE price index the Federal Reserve39;s preferred measure of inflation which could provide clues about the rate outlook in the U.S.

They were cautious on the single currency ahead of elections in Germany39;s three eastern states as two parties one farright and one economically farleft are polling together between 40 and 50.

The results from Thuringia may come as a negative shock to euro watchers, who have tended to be sensitive to political developments that point to uncertain political outlooks on the continent, said Thierry Wizman, global forex and rates strategist at Macquarie.

Thuringia and Saxony vote on Sept. 1, and Brandenburg follows on Sept. 22.

Possible consequences include drastic changes in regional policies, a breakup of the national…