- The US Consumer Price Index is expected to rise a 2.7% year -on -year in June, accelerating from the growth of 2.4% in May.
- The president of the United States, Donald Trump, continues to threaten tariffs and undermine the independence of the Fed.
- June inflation data will significantly impact the direction of the US dollar, since it is a key indicator for the path of Fed interest rates in the future.
The United States Labor Statistics Office (BLS) will publish consumer price index (CPI) for June at 12:30 GMT.
Markets will seek new signals from the President Donald Trump’s tariffs that are reflected in prices. Therefore, the US dollar (USD) could experience volatility with the publication of the CPI, since the data has a significant influence on the interest rates of the Federal Reserve (Fed) for this year.
What to expect in the next CPI data report?
Measured by the change in the CPI, Inflation in the US is expected to rise to an annual rate of 2.7% in Junehaving registered an increase of 2.4% in May. It is expected that the inflation of the underlying IPC, which excludes the volatile food and energy categories, rises 3% year -on -year, compared to the acceleration of 2.8% reported the previous month. In general, inflation is expected to move away from the objective of 2% of the Fed.
During the month, both the IPC and the underlying CPI are expected to advance 0.3% in the same period.
By anticipating the report, TD Securities analysts said: “It is likely that the June underlying IPC will bounce to 0.27% intermennsual (MOM) after the surprising fall of last month to 0.13%. We hope that the prices of the goods will be accelerated in June, reflecting some transfer of tariffs and recovering from the modest contraction of last month.”
“Unlike May, we do not expect the services segment to help compensate for that strength. General inflation also probably increased 0.27%, helped by energy prices,” they added.
How could the US Consumer Price Index report affect EUR/USD?
In the face of the US inflation confrontation on Tuesday, Markets digest a series of new tariff threats of President Trump so far this month.
During the weekend, Trump threatened with a 30% tariff to imports from the European Union (EU) and Mexico, starting on August 1, having sent tariff letters to about 20 countries more last week.
Meanwhile, Trump is accumulating political pressure for a more aggressive stimulus by the US Central Bank, undermining its independence. The president continued to criticize the president of the FED, Jerome Powell, saying on Sunday that “it would be a great thing if Powell renounce.”
The Economic Advisor of the White House, Kevin Hassett, warned during the weekend that Trump could have reasons to fire Powell due to cost overruns in the renewal of the Fed headquarters in Washington.
In this context, markets continue to value just over 50 basic points (BPS) of interest rate reductions this year, with Powell keeping his patient perspective on cuts.
The probabilities of a Fed rates cut in September are currently around 60%, according to the Fedwatch tool of the CME Group, lowering from 65% seen at the beginning of the month.
The Incredible expectations of a prolonged pause by the Fed are mainly due to the last tariff attack Trump and a resistant US labor market.
The US employment data showed that non -agricultural payroll (NFP) increased by 147,000, compared to the expectations of an increase of 110,000 jobs. Meanwhile, the unemployment rate fell to 4.1% last month compared to 4.2% in May.
Therefore, The June Inflation Report is critical to evaluate market assessment on the Fed Rate Perspectiveswhich in turn impacts the valuation of the USD in the short term.
An upward surprise in the monthly reading of the underlying CPI, which is not distorted by base effects, could provide an additional impulse to the recovery of the USD and press the EUR/USD. In this case, the data could revive the expectations of only one rate cut of the Fed this year.
However, a softer monthly underlying inflation could relieve concerns about the effect of tariffs on inflation, undermining USD demand. In this scenario, the EUR/USD could recover bullish traction.
Dhwani Mehta, leading analyst of the Asian session at FXSTERET, offers a brief technical perspective for the EUR/USD and explains:
“The torque fights with the support of the simple mobile average (SMA) of 21 days in 1,1665. Meanwhile, the 14 -day relative force index indicator (RSI) remains well above 50, despite the recent downward trend, suggesting that the bullish potential remains intact.”
“On the positive side, the immediate resistance level is aligned in the psychological brand of 1,1750, above which the round level of 1,1800 will be tested. More to the north, the maximum of several years of 1,1830 will come into play. Alternatively, a sustained movement below the 21 -day SMA could challenge the first support in the maximum of June 12, 1,1631. The following healthy support levels are around 1,1550 and the 50 -day SMA in 1,1474. “
Economic indicator
Consumer Price Index (Monthly)
Inflation or deflationary trends are measured by periodically adding the prices of a basket of representative goods and services and presenting the data such as the consumer price index (CPI). IPC data is collected monthly and are published by the Labor Statistics Office of the US the intermensual figure compares the prices of the goods in the month of reference with the previous month. The CPI is a key indicator to measure inflation and changes in consumption trends. Generally, a high reading is considered bullish for the US dollar (USD), while a low reading is considered bassist.
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Next publication:
Mar Jul 15, 2025 12:30
Frequency:
Monthly
Dear:
0.3%
Previous:
0.1%
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.
Inflation – Frequently Questions
Inflation measures the rise in prices of a representative basket of goods and services. General inflation is often expressed as an intermennsual and interannual percentage variation. The underlying inflation excludes more volatile elements, such as food and fuel, which can fluctuate due to geopolitical and seasonal factors. The underlying inflation is the figure on which economists focus and is the objective level of central banks, which have the mandate of maintaining inflation at a manageable level, usually around 2%.
The consumer price index (CPI) measures the variation in the prices of a basket of goods and services over a period of time. It is usually expressed as an intermennsual and interannual variation. The underlying IPC is the objective of the central banks, since it excludes the volatility of food and fuels. When the underlying IPC exceeds 2%, interest rates usually rise, and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually translates into a stronger currency. The opposite occurs when inflation falls.
Although it may seem contrary to intuition, high inflation in a country highlights the value of its currency and vice versa in the case of lower inflation. This is because the Central Bank will normally raise interest rates to combat the greatest inflation, which attracts more world capital tickets of investors looking for a lucrative place to park their money.
Formerly, gold was the asset that investors resorted to high inflation because it preserved their value, and although investors often continue to buy gold due to their refuge properties in times of extreme agitation in the markets, this is not the case most of the time. This is because when inflation is high, central banks upload interest rates to combat it. Higher interest rates are negative for gold because they increase the opportunity cost to keep gold in front of an asset that earns interest or place money in a cash deposit account. On the contrary, lower inflation tends to be positive for gold, since it reduces interest rates, making bright metal a more viable investment alternative.
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.
