The US dollar fell sharply on Wednesday after CPI data showed that US consumer prices rose less than expected in March, possibly reducing the likelihood that the Federal Reserve will continue to raise interest rates.
The Consumer Price Index (CPI) rose by 0.1% in March, below economists' expectations of a 0.2% increase. Core prices were in line as expected, with an increase of 0.4%.
The US dollar index fell to 101.52, from around 102.11 before the data. The Euro surged as high as $1.09900, the highest since February 2. The dollar eased to 132.81 Japanese yen, from around 133.85 before the data.
Futures traders tied to the Federal Reserve's policy rate on Friday were less certain whether the U.S. central bank would will raise its benchmark rate again or not. What's more, the government reported that Mac user prices rose less than expected.
US short-term interest rate futures rose after the report, and now reflect about a 60% chance of a quarter-percentage-point rate hike in May, compared to about a 73% chance seen before the data. The current target range is 4.75%-5.00%.
