Euro Recovers Against Dollar After US CPI Report

The Euro saw a brief decline against the US Dollar after the release of the August Consumer Price Index (CPI) data, but quickly recovered to its previous levels. The CPI report showed that headline inflation met expectations at 0.4% month-over-month (MoM), while core inflation came in hotter than forecast at 0.3% MoM.

The strong showing of gasoline prices, which rose 3.9% in August and accounted for over one-third of the monthly increase in headline inflation, contributed to the surprise increase in core CPI.

The data reinforced expectations that the Federal Reserve (Fed) could raise interest rates next week, with the CME FedWatch Tool now pricing in an 88% probability of a 25-basis-point increase.