U.S. Dollar Rallies Amid Fed Rate-hike Bets

(RTTNews) - The U.S. dollar strengthened against other major currencies in the European session on Wednesday, as hotter-than-expected U.S. inflation statistics increased anticipation that the Federal Reserve will raise borrowing costs next month.

The Labor Department released on Tuesday that the U.S. consumer price index rose by 0.4 percent in October after climbing by 0.6 percent in September. Economists had expected consumer prices to rise by 0.3 percent.

The report said core consumer prices, which exclude food and energy prices, climbed by 0.3 percent in October, matching the increases seen in the two previous months. Core prices were expected to edge up by 0.2 percent.

The Labor Department noted it is not able to provide data on the annual rate of consumer price growth due to the government shutdown in October 2025.

The hotter-than-expected inflation data led to renewed concerns about the outlook for interest rates ahead of the Federal Reserve's monetary policy meeting next month.

CME Group's FedWatch Tool is currently indicating a 90.5 percent chance the Fed will raise rates by a quarter point at its December meeting.

Before the release of the data, Fed Governor Christopher Waller said he is "leaning toward" a rate hike in December and would support "more robust action" if inflation exceeds estimates.

In the European trading today, the U.S. dollar rose to a 5-day high of 1.1132 against the euro, more than a 1-1/2-month high of 159.04 against the yen and nearly a 2-week high of 0.8293 against the Swiss franc, from early lows of 1.1170, 158.67 and 0.8250, respectively. If the greenback extends its uptrend, it is likely to find resistance around 1.10 against the euro, 161.00 against the yen and 0.88 against the franc.

Against the pound and the Australian dollar, the greenback edged up to 1.3314 and 0.6862 from early lows of 1.3356 and 0.6886, respectively. On the upside, 1.32 against the pound and 0.67 against the aussie are seen as the next resistance levels for the greenback.

Against the New Zealand and the Canadian dollars, the greenback advanced to a 2-day high of 0.5583 and nearly a 4-week high of 1.4222 from early lows of 0.5614 and 1.4186, respectively. The next possible upside target for the greenback is seen around 0.54 against the kiwi and 1.43 against the loonie.

Looking ahead, U.S. MBA weekly mortgage approvals data are slated for release in the New York session.