EUR/USD: Euro Falls Back to $1.05 After US Inflation Data Shows More Fed Action Needed

September’s inflation at 3.7% pumped the US dollar as the pair erased four days of steady gains.

• The EURUSD pair tumbled from its three-week high at $1.0639 on Thursday. The latest US inflation report propelled the dollar, forcing the pair to return to the grim and shaky area of $1.0500 to $1.0550. Thursday’s session took a 1% bite of the euro, wiping out gains accumulated over the previous four days.
• Consumer prices in the US for September didn’t cool. In fact, they came in 0.1% above Wall Street estimates. The CPI report showed annual price growth for the past month arrived at 3.7%, matching the clip from August. Energy products were among the leading factors for the flatlining price momentum.
• In that context, the Fed’s work is back in the spotlight. Prior to yesterday’s inflation print, markets were confident that Fed officials won’t tweak interest rates at their upcoming meeting on Oct. 31 – Nov. 1. Now, central bankers are facing increased uncertainty that inflation might go on the offensive again if they don’t counteract.