US inflation hurts Euro

The Euro (EUR) registers modest losses against the US Dollar (USD) courtesy of a slew of European Central Bank (ECB) officials adopting a neutral approach, while data from the United States (US) increased concerns the US Federal Reserve (Fed) could lift rates, after an inflation report. The EUR/USD is trading at 1.0598, down 0.13%.

Recently, the US Federal Reserve revealed its latest minutes from the September monetary policy meeting, with participants seeing upside risks on inflation but downside risks t economic activity, acknowledging that achieving the Fed’s goal has become two-sided. Fed policymakers noted that with policy about to peak, decisions and communications should shift towards the time horizon of keeping rates higher for longer.

After the minutes' release, the EUR/USD reaction was muted, remaining below the 1.0600 figure.

Earlier, the US Department of Labor (DoL) announced that inflation figures on the producer side were above estimates, and except for the Producer Price Index (PPI) monthly reading, expanding below the prior month’s number, most figures exceeded August data’s, suggesting inflation is reigniting, blamed on high energy prices, and the automobile union strike.

Aside from this, the latest Fed officials have struck a neutral approach, except for Fed Governor Michelle Bowman, who stressed that further tightening is needed.

Across the pond, ECB’s Kazaks said interest rates are appropriate to tame inflation to 2% in the second half of 2025 but kept the door open to additional hikes. On the data front, the Eurozone (EU) economic docket witnessed inflation in Germany continued to ease as expected.

After bouncing from new year-to-date (YTD) lows reached on October 3 at around 1.0448, the EUR/USD upward correction could be coming to an end after piercing the 1.0600 figure, but buyers' failure to cling to that figures could exacerbate a re-test of yearly lows. If EUR/USD reclaims 1.0600, that could open the door to test 1.0700; otherwise, the next support level to be challenged would be the October 6 swing low of 1.0482 before testing YTD lows of 1.0448.