Investing.com - The dollar was steady against the euro and the yen on Wednesday after stronger economic reports, including an uptick in inflation, boosted the outlook for higher U.S. interest rates.
EUR/USD was at 1.0929, holding below Tuesday’s highs of 1.1028.
The greenback strengthened after official figures on Tuesday showed that U.S. consumer prices rose 0.2% in February, rebounding after a 0.7% decline in January. On a year-over-year basis the U.S. consumer price index was flat after slipping 0.2% in January.
The report showed that gasoline prices rose 2.4%, the largest increase since December 2013, snapping seven months of declines.
Core inflation, which excludes food and energy costs ticked up 0.2% in February after a similar gain in January. Core inflation was up 1.7% from the same month last year, the largest increase since November.
The uptick in underlying inflation indicated that the Federal Reserve would still have leeway to tighten monetary policy even with inflation running below target.
San Francisco Fed President John Williams said Tuesday that the bank should start raising rates earlier and added that the fall in energy prices and the stronger dollar would only have a short term impact on inflation.
The dollar has weakened since the Fed indicated last week that it may raise interest rates more gradually than markets had expected.
Separate reports showed that sales of new homes in the U.S. surged in February, while manufacturing activity expanded this month.
USD/JPY was flat at 119.74, remaining supported above Tuesday’s three-week lows of 119.21.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was at 97.33 having pulled back from Tuesday’s one-week low of 96.58.