- It is expected that the US consumer price index will be moderated to 2.6% interannual in March.
- The underlying IPC inflation is expected to lower 3%.
- Inflation data could influence the FED rate perspective and the performance of the US dollar.
The United States Labor Statistics Office (BLS) will publish the Inflation Report of the High Impact Consumption Price Index for March on Thursday at 12:30 GMT.
IPC figures could significantly impact the US dollar (USD) and the Federal Reserve monetary policy (FED).
What to expect from the next IPC report?
Inflation in the US is expected to rise to an annual rate of 2.6% in March, slightly below 2.8% reported in February. It is expected that the inflation of the underlying IPC, which excludes the volatile food and energy categories, will be reduced to 3% in the same period compared to a growth of 3.1% in the previous month.
Monthly, it is projected that the IPC and the underlying IPC rise 0.1% and 0.3%, respectively.
By anticipating the report, TD Securities analysts pointed out: “We hope that this week’s IPC report show impulse. “
“In terms of the general figure, we project that the inflation of the CPI will be reduced again to a slight 0.07% m/m in March, led by a considerable contraction in the energy component. We also hope that food inflation will lose additional impulse, printing m/m plane,” TD Securities analysts added.
Economic indicator
Consumer Price Index (MOM)
The IPC is published by the US Labor Department and measures the price movements through the comparison between the retail prices of a basket of representative goods and services. The purchase power of the dollar is diminished due to inflation. The CPI is a key indicator to measure inflation and purchase trends. A reading superior to expectations is bullish for the dollar, while a lower reading is bassist.
Read more.
Next publication: PLAY APR 10, 2025 12:30
Frequency: Monthly
Dear: 0.1%
Previous: 0.2%
Fountain: US Bureau of Labor Statistics
The US Federal Reserve (FED) has a double mandate to maintain price stability and maximum employment. According to this mandate, inflation should be around 2% year -on -year and has become the weakest pillar of the Central Bank directive since the world suffered a pandemic, which extends until these days. Price pressures continue to increase in the midst of problems in the supply chain and bottlenecks, with the consumer price index (IPC) at maximum levels of several decades. The Fed has already taken measures to tame inflation and it is expected to maintain an aggressive position in the predictable future.
How could the US consumer price index affect the USD/USD consumption rate report?
The markets are increasingly concerned about the possibility that the US economy between recession due to the expectations of the global commercial conflict triggered by the aggressive tariffs of US President Donald Trump, who weigh strongly on economic activity. In turn, it is projected that the Federal Reserve (FED) adopt a moderate turn. According to the CME Fedwatch tool, the markets are currently valuing around 37% probability that the Fed drops the policy rate in 25 basic points (BPS) at the May policy meeting, compared to 10% of April 1.
However, those responsible for the Fed have placed more emphasis on the potential impact of tariffs on inflation instead of the growth perspective in their recent speeches. “The obligation of the Fed is to ensure that a specific increase in price levels does not become a continuous inflation problem,” said Fed President Jerome Powell. Similarly, the president of the Fed of San Francisco, Mary Daly, expressed concern that inflation can increase again due to tariffs, while the president of the Fed of Chicago, Austan Goolsbee, said there is anxiety among companies that high inflation will return.
Market positioning suggests that the USD faces a bidirectional risk for the publication of inflation data. A stronger annual general CPI fact could feed the expectations that the Fed maintain its policy in May and strengthen USD with the immediate reaction. On the other hand, a reading in or below 2.5% in these data could weigh on the USD and help the EUR/USD to continue uploading.
Eren Sengezer, principal analyst of the European session at FXSTERET, offers a brief technical perspective for the EUR/USD and explains:
“The relative force index indicator (RSI) in the daily chart remains above 60 and the EUR/USD operates above the simple mobile average (SMA) of 20 days after trying this level several times in the past week, reflecting a short -term bullish bias.
“Up, 1,1150 (static level) is aligned as the next resistance before 1,1200 (static level) and 1,1275 (July maximum 2023). Looking down, the first support could be found in 1,0880 (20 -day SMA) before 1,0800 (static level) and 1,0740 (200 -day SMA).
US dollar FAQS
The US dollar (USD) is the official currency of the United States of America, and the “de facto” currency of a significant number of other countries where it is in circulation along with local tickets. According to data from 2022, it is the most negotiated currency in the world, with more than 88% of all global currency change operations, which is equivalent to an average of 6.6 billion dollars in daily transactions. After World War II, the USD took over the pound sterling as a world reserve currency.
The most important individual factor that influences the value of the US dollar is monetary policy, which is determined by the Federal Reserve (FED). The Fed has two mandates: to achieve price stability (control inflation) and promote full employment. Its main tool to achieve these two objectives is to adjust interest rates. When prices rise too quickly and inflation exceeds the 2% objective set by the Fed, it rises the types, which favors the price of the dollar. When inflation falls below 2% or the unemployment rate is too high, the Fed can lower interest rates, which weighs on the dollar.
In extreme situations, the Federal Reserve can also print more dollars and promulgate quantitative flexibility (QE). The QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is an unconventional policy measure that is used when the credit has been exhausted because banks do not lend each other (for fear of the default of the counterparts). It is the last resort when it is unlikely that a simple decrease in interest rates will achieve the necessary result. It was the weapon chosen by the Fed to combat the contraction of the credit that occurred during the great financial crisis of 2008. It is that the Fed prints more dollars and uses them to buy bonds of the US government, mainly of financial institutions. Which usually leads to a weakening of the US dollar.
The quantitative hardening (QT) is the reverse process for which the Federal Reserve stops buying bonds from financial institutions and does not reinvote the capital of the wallet values ​​that overcome in new purchases. It is usually positive for the US dollar.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
