The U.S. dollar climbed against its most major counterparts in the European session on Thursday, as hotter than expected U.S. consumer inflation data brought forward expectations of interest rate hikes by the Federal Reserve.

The Labor Department report on Wednesday showed the fastest growth in consumer prices since November 1990.

U.S. treasury yields and inflation expectations surged, pushing up expectations for faster rate hikes by the Fed.

Traders are assessing the possibility of a liftoff soon after the end of the bond purchase program by the middle of next year.

The money markets are pricing in a first Fed rate hike by July.

San Francisco Federal Reserve Bank President Mary Daly on Wednesday said that inflation would ease after the impact of COVID-19 fades and pushed back against an early tightening expectations.

The greenback firmed to more than a 2-week high 0.9225 against the franc, more than 1-year high of 1.1454 against the euro and near a 1-year high of 1.3364 against the pound, following its prior lows of 0.9166, 1.1488 and 1.3433, respectively. The greenback is likely to face resistance around 0.94 against the franc, 1.13 against the euro and 1.32 against the pound.

The greenback reached a 4-week high of 0.7013 against the kiwi, 5-week highs of 1.2585 against the loonie and 0.7287 against the aussie, off its previous lows of 0.7071, 1.2473 and 0.7341, respectively. Next key resistance for the greenback is likely seen around 0.68 against the kiwi, 1.27 against the loonie and 0.70 against the aussie.

In contrast, the greenback pulled back to 113.81 against the yen, from a 1-week high of 114.16 seen at 9:45 pm ET. The currency may challenge support around the 112.00 area.

US Dollar vs Yen (FX:USDJPY)
Forex Chart
From Dec 2021 to Jan 2022 Click Here for more US Dollar vs Yen Charts.
US Dollar vs Yen (FX:USDJPY)
Forex Chart
From Jan 2021 to Jan 2022 Click Here for more US Dollar vs Yen Charts.