EUR/USD Bounces on Thursday as US Inflation Figures Weigh Fed Rate Outlook
The EUR/USD pair rebounded on Thursday after coming under pressure the previous day due to the US Dollar's (USD) recovery following the release of latest US inflation figures. At the time of writing, the pair traded around 1.1658, recovering from an intraday low of 1.1636 but still below its three-month high of 1.1711 touched earlier this week.
US Personal Consumption Expenditures (PCE) Price Index data showed that inflation remains sticky, with price pressures no longer accelerating sharply but not convincingly moving towards the Federal Reserve's (Fed) 2% target. The possibility of a rate hike cannot be ruled out, but an imminent move is not the base case.
Kansas City Fed President Jeff Schmid emphasized the need for the Fed to return inflation to 2%, while also noting that the energy shock is leaking into the economy. Meanwhile, ECB policymaker Dimitar Radev stated that he would be willing to raise interest rates in restrictive conditions and believes the neutral rate is 'probably around 2.5%.'