The US Dollar Index rallied 0.66% to reach its highest level since April 2025, while the euro fell to an 18-month low of $1.109 as markets priced in a more hawkish Federal Reserve.
Fed funds futures repriced hawkishly after the CPI release, with December meeting pricing edging up to 28.5bps and September 2027 expectations at 77-82bps. This lifted the Dollar Index by 0.66% to its highest level since April 2025. The direction is clear, though the overnight pullback from 82bps to 77bps suggests some of the move may be fading.
The euro fell 0.66% to an 18-month low against the dollar, closing around $1.109 with spot quoted at 1.108, as hawkish Fed repricing after the CPI print boosted the greenback. A hawkish Fed is directly negative for this pair, though the modest overnight pullback in distant Fed pricing could slow the decline.
The US Dollar Index climbed 0.66% to its highest level since April 2025 following a hawkish repricing of Fed funds futures. Markets adjusted expectations for the December meeting to 28.5bps after the latest CPI release, pressuring the euro to an 18-month low of $1.109.
Markets now price a more hawkish Federal Reserve after the inflation data, with December rate expectations up to 28.5bps, which supports the Dollar Index, now at its highest since April 2025.
Spot is quoted near 1.108 after closing around 1.109, an 18-month low for the euro against the dollar.