CPI News

I have a question regarding the CPI that came out at 8:30 AM. Why does the value of the dollar increase when the inflation goes up (i.e. 0.4% from 0.2%)? Is it due to expected interest rate hikes? Also does anyone know why the EuroUsd made such a big comeback shortly after the news? Thanks.

Im not sure. Maybe the possible fed hike was already priced into the market and the cpi data are not GOOD ENOUGHT to make the dollar stronger in this moment.
But I think that the real price will be seen later. This reactions don't could so much I guess. Just to profit

If you think of the US as a big bank, if intrest rates go up then it is like a bank, customers flock to your doors to deposit (invest). If the US is paying a higher rate (due to inflation) then money is atracted onshore. In the short run, on a news day, it is anybody's guess as to what the market will do.

according to FXCM news, profit taking and stop hunting caused the cascade effect where one triggered the others.

I was watching the GBP/USD the uptick there was most likely pent up demand for gbp as it was bottoming out on support levels. (in addition to what you said)

EUR/USD actually retraced a 50pip move completely in the starting minutes of the news. then at 9am shot up 100pips. something is happening beyond the small guy's control.

long or short would've been dangerous unless you were willing to stick it out a 100% retracement. Though stops might've been at the lows of yesterday.

Could this have been a short squeeze play?
Maybe a combo of everything?

I'm new to this work, so this could be in right field.