Euro stays under pressure as German CPI confirms inflation is easing

• At 1.1155, EUR/USD is down from Tuesday’s highs in the mid-1.1200s, though still trading within its recent ranges.
• October’s easing in price pressures was confirmed by Germany’s final HICP figures.
• Strong inflation readings and hawkish remarks from Fed officials have lent support to the US Dollar.

Germany’s final inflation figures have offered no support to the Euro (EUR), which is losing ground against the US Dollar (USD) for a second successive day on Wednesday. EUR/USD stands at 1.1155 following a pullback from Tuesday’s session highs just above 1.1250. The pair nevertheless holds within its earlier range, above its year-to-date lows around 1.1110.

A monthly decline of 0.1% and annual growth of 2.8% in October were confirmed by Germany’s final Harmonised Index of Consumer Prices (HICP), matching the preliminary estimates. In September, the corresponding increases were 0.6% and 3.3%.

US CPI strengthens expectations of Fed tightening

Stronger-than-forecast US Consumer Price Index (CPI) readings, alongside hawkish remarks from Federal Reserve (Fed) officials, have all but confirmed a December interest rate rise. Against that backdrop, the US Dollar is outpacing most of its peers on Wednesday.

Figures from the US Bureau of Labor Statistics (BLS) showed that consumer prices increased by 0.4% in October, exceeding the market forecast of 0.3%, as food and accommodation costs rose. A 0.3% rise in core inflation also surpassed expectations. Year-on-year figures, however, were not disclosed because of the 2025 Federal Government shutdown.
A call for “further gradual tightening” to return inflation to target came from Philadelphia Fed President Anna Paulson on Wednesday. Dallas Fed President Lorie Logan followed a few hours later, saying that “it is clear that the Fed needs at least two more quarter-percentage-point  increases.”

With this backdrop supporting the US Dollar across the board, markets have almost fully priced in an interest rate rise at the Fed’s December 9 monetary policy meeting. Pricing also implies a 12% probability of a 50-basis-point increase.