The euro fell 0.2% to about 1.1138 against the US dollar in European trading on Wednesday, as the greenback strengthened on expectations the Federal Reserve could pursue a more aggressive tightening path in response to persistent inflation. The US Dollar Index (DXY) climbed to an almost four-week high of 102.51. Markets, via the CME FedWatch tool, have begun to price a 50 basis point rate rise in December after hotter-than-forecast October US CPI, though the implied probability is around 13.5%.
US Inflation Data and Fed Expectations
October core CPI rose 0.30% month on month versus 0.2% expected, marking a third straight 0.3% print and implying a three-month annualised rate of 3.75%. Headline CPI increased 0.35% versus 0.3% expected, with a three-month annualised pace of 5.72%.
Euro Volatility and Technical Analysis
ECB leadership uncertainty is also feeding volatility, with discussion of potential new, more tailored instruments if Europe were to face a future crisis. Technically, EUR/USD remains below the 20-day EMA at 1.1200; the 14-day RSI is around 41, with support at 1.1104 then 1.1000.
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