Euro remains on its back foot as German CPI confirms easing price pressures

EUR/USD retreats to 1.1155 from Tuesday's highs in the mid-1.1200s but remains within recent ranges.
German final HICP data confirmed that price pressures eased in October.
The US Dollar has gained traction amid hot inflation numbers and hawkish Fed speakers.

Guillermo Alcala FXStreet

The Euro (EUR) extends losses against the US Dollar (USD) for the second consecutive day, on Wednesday, failing to find support in the final German inflation release. The EUR/USD trades at 1.1155, after retreating from session highs just above 1.1250 on Tuesday, although it remains within the previous range, above year-to-date lows at the 1.1110 area.

Final German Harmonized Index of Consumer Prices (HICP) data confirmed preliminary estimates of a 0.1% monthly contraction and the 2.8% year-on-year growth in October. These figures follow 0.6% and 3.3% respective increases in September.

US CPI data boosts Fed tightening hopes

Meanwhile, the US Dollar is outperforming most peers on Wednesday, favoured by a mix of hotter-than-expected US Consumer Price Index (CPI) figures and hawkish comments by Federal Reserve (Fed) speakers, which have practically confirmed that the central bank will hike rates in December.

US consumer prices rose 0.4% in October, overshooting the 0.3% growth expected by the market, amid higher costs of food and accommodation, according to data released by the US Bureau of Labor Statistics (BLS). Core inflation also beat expectations with a 0.3% increase, while year-on-year data was undisclosed due to the 2025 Federal Government shutdown.
On Wednesday, Philadelphia Fed President Anna Paulson called for a “further gradual tightening” ahead to bring inflation to target. A few hours later, Dallas Fed President Lorie Logan said that “it is clear that the Fed needs at least two more quarter-percentage-point increases.”

In this context, markets are practically fully pricing a rate hike at the December 9 Fed monetary policy meeting, with a 12% chance of a 50-basis-points hike priced in. This is boosting the US Dollar across the board.

Economic Indicator

Harmonized Index of Consumer Prices (MoM)

The Harmonized Index of Consumer Prices (HICP), released by the German statistics office Destatis on a monthly basis, is an index of inflation based on a statistical methodology that has been harmonized across all European Union (EU) member states to facilitate comparisons. The MoM figure compares the prices of goods in the reference month to the previous month. Generally, a high reading is bullish for the Euro (EUR), while a low reading is bearish.

Economic Indicator

Harmonized Index of Consumer Prices (YoY)

The Harmonized Index of Consumer Prices (HICP), released by the German statistics office Destatis on a monthly basis, is an index of inflation based on a statistical methodology that has been harmonized across all European Union (EU) member states to facilitate comparisons. The YoY reading compares prices in the reference month to a year earlier. Generally, a high reading is bullish for the Euro (EUR), while a low reading is bearish.

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