US dollar gains following US inflation data eased in the European session as investors' focus now shifted to the release of the US producer inflation report in the New York session.
US annual inflation surprised markets after unexpectedly posting a stronger-than-expected increase despite falling from the previous month, at 8.3% in August.
Meanwhile, on a monthly basis, consumer prices increased by 0.1% and core inflation was also higher at 0.6% compared to the previous month.
This indirectly triggered new investor expectations for a 100 basis point increase in Federal Reserve (Fed) interest rates.
Meanwhile, the US producer price index (PPI) is forecast to register a slight increase in August after declining in July.
This is likely to influence the next move for the giant currency US dollar which is currently trading not far from the 20-year high it reached last week.
Turning to European currencies, the pound traded slightly higher taking advantage of the move in the US dollar even though the latest UK inflation data surprised the market by recording a decline last month.
UK consumer prices rose to 9.9% on an annual basis last month from 10.1% recorded in July, and missed expectations for a 10.2% increase.
Although this figure is seen as giving some relief to the Bank of England (BOE), it is still at a 40-year high.
In the meantime, the euro remains stuck around the lows with price movements trying to rise above parity against the USD again.
