EUR/USD: Dollar strengthens on higher inflation numbers

By FXstreet.com | June 17, 2014 AAA

FXStreet (London) - The dollar strengthened against the euro following stronger-than-expected inflation numbers.

The US Bureau of Labor Statistics reported that the Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in May on a seasonally adjusted basis. Year-on-year, the all items index increased 2.1 percent before seasonal adjustment.

Tapering to maintain pace

The inflation data came in at twice the consensus expectation of a year-on-year increase of 0.2 percent. The data comes as the US Federal reserve begins its twp-day meeting at which it will discuss the pace of its plans to taper is monthly asset purchase programme. It is expected that tomorrow the central bank will announce that it will be slowing its rate of monthly asset purchases by USD10bn to USD35bn.

The rise in inflation, closer to the Fed’s 2 percent goal, suggests that the Fed may move to hike rates earlier than had been forecast and increases bets that the Bank will continue with its current pace of cuts to its asset purchase programme.

EUR/USD is currently trading at USD1.3543, falling to a session low of USD1.3538 after being range-bound ahead of the BLS data release. The pair is down 0.21 percent on the session.

comments powered by Disqus
Related Forex Analysis
  1. USD/JPY Traders Await Clearer Guidance As A Doji Signals Hesitation
    Forex News

    USD/JPY Traders Await Clearer Guidance As A Doji Signals Hesitation

  2. USD/JPY is dancing around 107.00
    Forex News

    USD/JPY is dancing around 107.00

  3. USD/CAD Tests Critical Barrier As Intraday Dojis Denote Indecision
    Forex News

    USD/CAD Tests Critical Barrier As Intraday Dojis Denote Indecision

  4. NZD/USD Stalls At 0.8000 Barrier As A Doji Arises & Volume Fades
    Forex News

    NZD/USD Stalls At 0.8000 Barrier As A Doji Arises & Volume Fades

  5. EUR/USD sidelined above 1.2700
    Forex News

    EUR/USD sidelined above 1.2700

Trading Center