Euro plunges to 17-month low as hot US inflation fuels Fed rate hike bets
EUR/USD extends its decline on Wednesday, losing 0.55% on the day to trade around 1.1135 at the time of writing, its lowest level since May 2025.
The US Dollar (USD) gained strength on Wednesday as fresh US inflation data sparked speculation of additional Federal Reserve (Fed) rate hikes. The Euro (EUR) weakened to a 17-month low of 1.1135 against the USD, its lowest since May 2025. This drop occurred after the US Consumer Price Index (CPI) rose by 3.7% year-over-year in September, exceeding market expectations.
Core CPI also increased to 2.6% YoY, signaling persistent inflationary pressures in the US economy. This data fueled expectations that the Fed may need to maintain a restrictive monetary policy for longer to control inflation. The prospect of higher interest rates bolstered the USD, while the EUR faced challenges due to fiscal concerns in France.
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