By Joseph Adinolfi, MarketWatch , Hiroyuki Kachi

NEW YORK (MarketWatch) -- The U.S. dollar rose to a nearly 12-year high against the euro Thursday after a stronger-than-expected core consumer-price index number raised hopes that the recent drop in inflation will soon fade, as the Fed has predicted.

Fed officials have repeatedly said that the central bank wouldn't raise interest rates until it is certain inflation is on track to hit its target level of 2% annually.

The euro (EURUSD) traded as low as $1.1999 after the data, its lowest level since Jan. 26. It was more recently trading at $1.1207, compared with $1.1361 Wednesday.

The ICE U.S. Dollar Index (DXY), a measure of the greenback's strength, rose 1% to 95.1500, according to FactSet data.

Core CPI rose 0.2% in January, beating a consensus forecast of 0.1% growth from economists polled by MarketWatch. The headline CPI number, which factors in more-volatile food and energy prices, reflected a 0.7% contraction, in-line with economists' forecasts.

Currency traders largely dismissed less-flattering jobless-claims data and the solid durable-goods orders report, analysts said. New unemployment claims rose to 313,000 last week, a six-week high.

The volatile durable-goods orders number rose to 2.8% in January, beating expectations. Meanwhile, orders for core capital goods, a proxy for business investment, rose 9.5%.

"After throwing all this data in a blender and setting it to puree, traders have come to the conclusion that this morning's reports represent a small positive for the world's reserve currency, and the dollar index is now edging up back up to the mid-94.00s," wrote Matthew Weller, senior technical analyst at Forex.com.

Elsewhere, the dollar rose to 119.37 yen(USDJPY) , compared with Yen118.87 Wednesday. The pound (GBPUSD) fell to $1.5407, compared with $1.5521.

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