The Euro struggles near 1.1150 as hotter-than-expected US inflation data and hawkish Fed rhetoric boost the dollar, keeping the pair anchored in the lower half of its established five-week trading range.
October core US CPI beat forecasts at 0.3% vs 0.2% expected, and Dallas Fed's Logan calls for two more quarter-point hikes, with a second by January priced at about 74%. That widens the US-ECB rate gap (ECB deposit rate 2.50%), weighing on the Euro, which slipped below 1.1150 toward the bottom of its 1.1100-1.1300 range. Countervailing: markets price two ECB hikes by mid-2027 and hawkish ECB speakers (Lagarde, Schnabel) this week could narrow the gap.
October core CPI beat forecasts at 0.3% vs 0.2% expected, and Dallas Fed's Logan wants two more quarter-point hikes, with a second by January priced at about 74%. Rising US rate bets make the dollar more attractive, especially with Friday's core PPI forecast steady at 5% and the Fed's December 9 hike already priced. Resistance could come from any signs the ECB will also hike.
The Euro is testing the lower bounds of its 1.1100-1.1300 range after core US consumer prices rose 0.3% in October, exceeding the 0.2% forecast. Hawkish commentary from Dallas Fed President Logan, who signaled two additional quarter-point hikes, has widened the interest rate gap against the ECB's 2.50% deposit rate. Markets are now looking to upcoming remarks from ECB President Lagarde and Eurozone Q3 GDP data to gauge potential policy shifts.
Core US consumer prices rose 0.3% in October against a 0.2% forecast, lifting bets on further Fed hikes, which would put US rates 1.75-2.00 percentage points above the ECB's 2.50% deposit rate and make the dollar more attractive than the Euro.
Comments from ECB President Lagarde on Wednesday and Thursday and Friday's Eurozone Q3 GDP reading (forecast 0.4%) could influence whether the ECB hikes in December, which the article says would narrow the rate gap for the Euro.
Hotter-than-expected US inflation (core CPI +0.3% in October vs 0.2% forecast) and hawkish Fed commentary, including Dallas Fed President Logan's call for two more quarter-point hikes, have lifted expectations of further US rate increases.