EUR/USD: Euro Loses Sight of $1.10 as Traders React to Warm US Inflation at 3.4% for December

Euro slipped from near $1.10 as traders rushed to the US dollar following a hotter-than-expected consumer price report showing inflation remained far from the Fed's goal.

• The EURUSD pair slipped modestly on Thursday and drifted back into the consolidation area which has been its home so far this year. Over the past seven trading days, the exchange rate has been trading under a lid of $1.0970 but brewing volatility might not keep it there for long.
• It’s inflation day and the US published December’s consumer price report. Inflation figures heated up above the 3.2% consensus and arrived at a 3.4% annual growth clip for December. The figure complicates the monetary policy outlook and casts a shadow over the keenly awaited three interest rate cuts this year.
• The Federal Reserve will need stronger, more convincing statements that inflation has crept back down and is no longer a threat to the economy. The central bank would ideally tolerate a 2% rate of inflation. Until the CPI skitters down to that mark, the fog of uncertainty will remain an eerie theme in financial markets.