US April CPI rose to 3.8%, exceeding expectations and strengthening Fed rate hike speculation.
The EUR/USD pair fell to 1.1735 in early Asian trading on Wednesday, pressured by stronger-than-expected US inflation data. The US Consumer Price Index (CPI) climbed 3.8% year-over-year in April, up from 3.3% in March and above the 3.7% consensus forecast. Monthly CPI increased 0.6%, matching estimates, while core CPI rose 0.4% month-over-month and 2.8% annually.
The hotter inflation print reinforced expectations for Federal Reserve interest rate hikes later this year, bolstering the USD. Markets now await the US April Producer Price Index (PPI) report due later Wednesday for further direction. Meanwhile, hawkish comments from ECB officials, including Bundesbank President Joachim Nagel, suggested potential rate increases in the eurozone if energy prices remain elevated.