US July inflation data aligned with forecasts, reducing bets on Federal Reserve rate hikes and weighing on the Euro.
The Euro retreated from a two-day high of 1.1563 against the US Dollar after July’s US Consumer Price Index met expectations, easing pressure on the Federal Reserve. EUR/USD fell 0.17% to 1.1522 as traders adjusted positions ahead of upcoming US Producer Price Index data and Eurozone releases.
Annual US CPI dipped to 3.4% from 3.5%, while core CPI declined to 2.5% from 2.6%. The report shifted market expectations, with odds of a September rate hold rising to 60% from 40%. In the Eurozone, Germany’s July HICP remained steady at 2.8%, though energy prices continued to drive inflation concerns.
Investors now await Spain’s inflation data and Eurozone Industrial Production figures, with forecasts pointing to a slight improvement in June’s contraction to -0.8% from -1.2%.