LONDON, Oct 13 Reuters The U.S. dollar edged lower on Friday after its biggest daily increase since March the day before, as hot U.S. consumer prices data revived prospects that the Federal Reserve may have to raise rates further to get inflation back towards its 2 target.

The consumer price index CPI increased 0.4 in September, keeping the annual rate at 3.7, the same as in August. Economists polled by Reuters had forecast the CPI would gain 0.3 on the month and 3.6 yearonyear.

The data will keep the Fed on its toes, said Nicholas Van Ness, U.S. economist at Credit Agricole CIB.

While our base case remains an extended pause that lasts into 2024, further upside surprises in upcoming CPI and employment reports could leave a hike on the table for December or after, Van Ness added.

The dollar index , which measures the U.S. currency against six of its major peers, ticked down around 0.1 to 106.36. On Thursday it rose 0.8 to 106.6, its biggest oneday jump since March 15.

The boost to the greenback on Thursday saw the yen sliding back toward the sensitive 150line briefly touched last week before strengthening sharply, which led some to believe authorities were intervening in the currency market.

The Japanese currency was last at 149.69 per dollar , keeping traders on guard should the currency weaken further.

The risk of intervention is clearly high and that is constraining dollaryen which would otherwise be higher, said Adam Cole, chief currency strategist at RBC….