EUR/USD Reaches 1.1599 After Stronger US Core Inflation

The EUR/USD exchange rate closed near 1.1599 on Friday after stronger US core inflation reinforced expectations of a Federal Reserve rate increase, making it harder for the Euro to reach 1.20.

MUFG's bearish Euro scenario points towards 1.14, approximately 1.7% below the closing price, with the bank now expecting a September Fed hike and EUR/USD closing below 1.16.

The August CPI release showed core prices rising 0.3% on the month, accelerating from July's 0.2% increase and exceeding the 0.2% consensus.

MUFG subsequently changed its own Fed forecast: 'As a result, we now expect the Fed to hike rates by 25bps in September.'