US Dollar Surges on Inflation Data: Impact on EURUSD and Forex Market

The US dollar surged ahead, propelled by a series of data indicating that inflationary pressures may persist longer than previously anticipated.

EURUSD rebounded from $1.0870 amidst inflation concerns triggered by PPI data, while the dollar registered notable gains in FX transactions.

On Thursday, the EURUSD pair experienced a decline of 0.8%, equivalent to roughly 80 pips, and continued to face downward pressure into early Friday trading sessions. Traders reacted swiftly to another round of robust price reports, fueling speculation that escalating inflation could affect the Federal Reserve's timeline for interest rate adjustments.

February's producer price index (PPI) surpassed expectations by rising to 0.6%, exceeding the anticipated 0.3% increase. This index, which tracks inflation trends at the wholesale level, surged to a 12-month rate of 1.6%. The uptick in producer prices compounded a series of inflationary data releases, including February's consumer price index reading of 3.2%.

The expectation of prolonged high inflation bolstered the dollar's value across various currency pairs. EURUSD dipped to levels near $1.0870 before rebounding by approximately 20 pips during early Friday trading. Meanwhile, USDJPY hovered around ¥148.50 as traders awaited the Bank of Japan's upcoming rate-setting conference.