Euro Under Pressure After Hot US CPI, Dollar Strengthens
The euro weakened against the US dollar in early Asian trading on Wednesday (May 13), with EUR/USD falling to around 1.1735 after higher-than-expected US inflation data, strengthening the dollar.
BLS data showed that US CPI in April rose 3.8% year-on-year (yoy) from 3.3% in March, the highest since May 2023 and above the consensus of 3.7%. On a monthly basis, CPI rose 0.6% month-on-month (mom), slowing from 0.9% in March but still in line with expectations.
Core inflation also remained solid: core CPI rose 0.4% month-on-month and 2.8% year-on-year (yoy). This combination fueled speculation that the Fed could raise interest rates again this year, which generally supports the USD and pressures EUR/USD.
From Europe, comments from ECB officials cushioned the euro's weakness. Bundesbank President Joachim Nagel assessed that the likelihood of an interest rate hike is increasing due to the impact of the Iran war, while ECB Governing Council member Martin Kocher said there is no need to delay the increase if energy prices do not improve quickly.
The market is now awaiting the release of the US Producer Price Index (PPI) for April for further clues on inflation. At the same time, market expectations remain hawkish for the ECB, with a 92% probability of a 25 bps hike at the June meeting, and a total of three hikes expected by the end of 2026. (asd)
Source: Newsmaker.id
