Dollar drops after Weak CPI print


The EURUSD pair was trading 0.6% higher on Tuesday, as weak US inflation undermined the greenback. The USD was down against most of the major currencies.

The headline Consumer Prices index fell 0.8% month-on-month - the most significant drop since 2008 - as soaring food inflation was dominated by plunging energy, apparel, and lodging costs. The year-on-year changed came out at 0.3%. 

However, the core CPI printed 0.4% on a monthly basis, which was the biggest monthly decline since records began in 1961. Here, the yearly change fell to 1.4%. The greenback was sold after these weak numbers as deflationary pressures will most likely lead to more monetary policy stimulus by the Fed.

From other news, US equities rose again, and indices were half a percent higher ahead of the US open, having erased their intraday losses.

Oil also advanced, and the WTI benchmark settled above 26 USD, while Brent climbed above the psychological 30 USD level. 

Later in the day, five Fed governors will speak, starting at 9 am New York time. They may increase the pushback on negative interest rates. Precious metals reacted to the upside and gold crawled back above the important resistance of 1,700 USD.
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