Inflation in the US has exceeded forecasts, fueling expectations of another interest rate hike by the Fed
The value of the euro against the US dollar has fallen below the 1.1105 mark, reaching its lowest level since the spring of 2025. This trend is driven by higher-than-expected inflation data in the US, which is stimulating market expectations for further interest rate hikes by the Federal Reserve. This was reported by Minfin citing Investing.com, according to the portal PromPolitInform.
The EUR/USD currency pair has demonstrated a significant decline, falling to a level of around 1.1083. This value marks a new low for the current year, breaking through the previous 1.1105 mark recorded at the end of October.
US Macroeconomic Indicators
According to official data, the core consumer price index in the US rose by 0.3% month-on-month in October. This figure surpassed analyst forecasts, which had anticipated a 0.2% increase, with core inflation showing an upward trend for the third consecutive month.
The headline consumer price index for October increased by 0.4%, following a 0.6% rise in September. Sustained price pressures are prompting market participants to revise their forecasts regarding the future monetary policy of the US regulator.
Market Expectations and Fed Decisions
Financial analysts point out that the persistent inflationary burden increases the likelihood of the Federal Reserve continuing its interest rate hike cycle. Specifically, market forecasters estimate an 86% probability of a 25 basis point hike at the December meeting.
The prospect of rising borrowing costs in the US supports demand for dollar-denominated assets, particularly government bonds. This, in turn, exerts additional pressure on the European currency, as a stronger dollar reduces the amount of US currency that can be obtained for one euro.
Currently, the Federal Reserve maintains its target interest rate range at 3.75–4.00%. The regulator’s next meeting, where updates on monetary stimulus are expected, is scheduled for December 8–9.
Photo: Minfin
