Breaking: US Core CPI misses, only 2.0% y/y, EUR/USD leaps

The US consumer price index missed with a rise of only 2.0% year on year on Core CPI and 0.1% on a monthly basis in May. Headline inflation rose by only 1.8% YoY, also below expectations while advancing by 0.1% m/m.

The US dollar has dropped on the news with EUR/USD rising toward the highs. The pair has emerged from the lows close to 1.1300 and nears the 11-week high of 1.1348 seen on Friday.

Here is how the move looks on the 15-minute chart:

The FXStreet Surprise Index has foreseen a downside surprise in inflation. 

Average hourly earnings – also part of the report – have accelerated from 1.2% to 1.3% in May. Weekly earnings are up from 0.9% to 1%. Last week's Non-Farm Payrolls report showed a deceleration in wage growth and a weaker than expected gain of jobs, only 75K. 

The Federal Reserve will announce its decision in one week and the disappointing data increases the chances of a more dovish decision – signaling rate cuts later this year. 

-- more to come