June US CPI fell 0.4% MoM, below forecasts, easing Fed rate hike bets and pressuring the USD.
EUR/USD climbed to 1.1420 on Tuesday as the US Dollar weakened after softer-than-expected US inflation data. The June Consumer Price Index dropped 0.4% month-over-month, missing expectations of a 0.1% decline and May’s 0.5% gain. Annual inflation slowed to 3.5% from 4.2%, below the 3.8% forecast.
Core CPI held steady on the month, while the annual rate eased to 2.6% from 2.9%. US employment indicators also softened, with the ADP Employment Change four-week average dipping to 19.75K from 21K. The data reduced expectations for a Federal Reserve rate hike in July.
Fed Chair Kevin Warsh maintained a hawkish tone in congressional testimony, emphasizing inflation control and describing the labor market as stable. Geopolitical tensions persisted as the US announced a blockade on Iranian vessels but dropped a proposed 20% reimbursement fee for Strait of Hormuz cargo.