EUR/USD trades below the 200-period EMA at 1.1248 as hawkish Fed rhetoric and hot US inflation data bolster the US Dollar, though de-escalation hopes in the US-Iran conflict cap further gains.
The hotter-than-expected October CPI (0.4% headline, 0.3% core) reaffirmed a possible Fed hike in December, and Waller said a 50 bps move is on the table while Paulson scored a hawkish 8.1/10 on the FXS Speechtracker. This triggered a sharp USD rally. Only easing US-Iran tensions temper the safe-haven bid.
Hot October US CPI (headline 0.4% m/m vs 0.3% expected, core 0.3% vs 0.2% expected) revived bets on a Fed hike, with Waller floating a larger 50 bps move at the December 8-9 meeting. Hawkish Fed speak (Paulson, Logan) drove a sharp USD rally and pushed EUR/USD back below the 200-period EMA at 1.1248. De-escalation hopes on the US-Iran war and today's German CPI could limit further downside.
The Euro remains under pressure against the US Dollar after October CPI data showed headline inflation at 0.4% and core inflation at 0.3%. Fed Governor Christopher Waller signaled a potential 50 bps rate hike for the December 8-9 meeting, driving a sharp USD rally. Traders are now awaiting German HICP data and ECB commentary to gauge potential support for the Euro.
October US CPI came in above expectations and Fed officials, including Governor Waller, signaled a possible larger 50 bps rate hike at the December 8-9 meeting, which raises expected US rates and supports the Dollar.
Progress toward resolving the US-Iran war, as suggested by Rubio's G7 remarks, would reduce safe-haven demand for the Dollar.
US inflation surprised to the upside in October (headline 0.4% m/m, core 0.3% vs 0.2% expected), and several Fed officials including Waller floated a larger 50 bps rate hike in December, driving a sharp US Dollar rally against the Euro.
Signs of de-escalation in the US-Iran war and a strong German CPI reading (consensus 2.8% YoY) due Wednesday, plus any EUR/USD break back above the 200-period EMA near 1.1248, could ease the downside pressure.