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NEW YORK, (Reuters) - The euro again targeted record highs against the dollar on Monday after higher-than-forecast euro-zone price data reinforced expectations that the inflation-focused European Central Bank will not start cutting rates soon.

Annual euro-zone inflation jumped to 3.5 percent in March, a record since the inception of the euro according to Reuters data and out-stripping the 3.3 percent consensus.

The outlook for euro-zone rates contrasts with the United States where the Federal Reserve is widely expected to continue to cut the benchmark rate in a bid to stoke economic growth. Higher rates tend to lure investors and increase demand for a currency.

“While the euro-zone data points to some deceleration of growth, elevated prices remain the ECB’s main concern,” said Marc Chandler, currency analyst at Brown Brothers Harriman in a research note to clients. “However, as the euro’s upside momentum appears to be fading just below the high made a couple of weeks ago, the market seems particularly vulnerable to another bout of euro profit-taking.”

The euro rose as high $1.5834 after the data — around 2/3 of a cent short of the record highs set two weeks ago — before retreating a little to around $1.5806 in early New York trade.

The Federal Reserve has slashed rates by 300 basis points since September in a bid to restart flagging growth and is expected to cut again as soon as next month FEDWATCH.

The contrasting interest rate and growth paths have pushed the euro 8.3 percent higher versus the dollar since the start of the year. The euro is on track for its biggest quarterly percentage gains since the fourth quarter of 2004.

Down 6.5 percent, the dollar index is also targeting its worst performance since the fourth quarter of 2004.

REUTERS