Forex News
Annual inflation in the United States (US), as measured by the change in the Consumer Price Index (CPI), climbed to 3.8% in April, the US Bureau of Labor Statistics (BLS) reported on Tuesday.
Developing story, please refresh the page for updates.
This section below was published as a preview of the US Consumer Price Index (CPI) data at 04:00 GMT.
- The US Consumer Price Index is expected to rise 3.7% YoY in April as energy prices remain persistently high.
- Annual core CPI inflation is expected to edge slightly higher to 2.7%.
- EUR/USD’s technical outlook highlights a bullish stance that lacks momentum.
The US Bureau of Labor Statistics (BLS) will publish the April Consumer Price Index (CPI) data on Tuesday.
The report is expected to show another significant leap in consumer inflation after March’s sharp increase, driven by the elevated Oil prices due to the ongoing conflict between the United States (US) and Iran.
The monthly CPI is forecast to rise 0.6%, following the 0.9% increase recorded in March, while the annual reading is seen climbing to its highest level since September 2023 at 3.7%, from 3.3% in March. Core CPI figures, which exclude volatile food and energy prices, are expected to come in at 0.3% and 2.7%, on a monthly and yearly basis, respectively.
From the beginning of the conflict in the Middle East on February 28 to the end of April, the barrel of West Texas Intermediate (WTI) rose more than 50%. Although crude Oil prices corrected lower in the first week of May, they are still about 40% above where they were before the US-Iran war.
Previewing the inflation data, "our economists expect headline inflation to rise by +0.58% month-on-month, moderating from March’s +0.9%, but still relatively firm,” said Deutsche Bank’s Jim Reid.
"In contrast, the core measure is projected to accelerate to +0.39% MoM from +0.2%, suggesting underlying price pressures remain sticky even as energy-related effects fade. The YoY rates would move from 3.3% to 3.8% for the former and from 2.6% to 2.8% for the latter,” Reid added.
Economic Indicator
Consumer Price Index (MoM)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The MoM figure compares the prices of goods in the reference month to the previous month.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Next release: Tue May 12, 2026 12:30
Frequency: Monthly
Consensus: 0.6%
Previous: 0.9%
Source: US Bureau of Labor Statistics
The US Federal Reserve (Fed) has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.
What to expect in the next CPI data report?
CPI figures for April will reflect the impact of persistently high Oil prices on inflation. Since this is largely anticipated, core inflation figures will help markets gauge whether rising energy costs are spilling over into the broader economy and driving up the prices of other goods and services.
A reading above the market expectation of 0.3% in the monthly core CPI could feed into concerns over high inflation getting entrenched in the economy. Conversely, a print below analysts’ forecast could ease fears over prices getting out of control. Still, even in this latter scenario, investors are unlikely to breathe a sigh of relief because the US-Iran crisis remains unresolved and the lack of naval activity in the Strait of Hormuz continues to pose a significant risk to global energy supply chains.
Minneapolis Federal Reserve (Fed) President Neel Kashkari said the price shock from a prolonged closure of the strait could put inflation expectations at risk and requires a strong policy response. Similarly, St. Louis Fed President Alberto Musalem noted that inflation is meaningfully above the Fed’s target and added that policymakers need to worry about the underlying inflation, along with tariff and Oil shocks.
How could the US Consumer Price Index report affect EUR/USD?
Markets currently see about a 73% chance of the Fed leaving the policy rate unchanged at 3.5%-3.75% by the end of the year, and price in about a 20% probability of a 25 basis points (bps) hike, according to the CME FedWatch Tool.
A stronger-than-forecast monthly core CPI print for April could cause investors to lean toward a rate hike later in the year. In this scenario, the US Dollar (USD) could gather strength with the immediate reaction.
On the other hand, a soft core CPI print could have the opposite effect on the USD’s valuation. However, unless there are any significant developments hinting at the US-Iran conflict coming to an end soon, any negative impact on the USD could remain short-lived.
"Investors will be on heightened alert for the possibility of further delays to the first rate cut – or even an inability to ease in 2H26 altogether – should energy prices rise sharply and persistently due to an escalation or prolongation of the Middle East conflict,” UOB Group’s Alvin Liew explains.
“A broader oil-related price spillover across the CPI basket would materially complicate the inflation outlook, raising the risk that the anticipated year-end cut is pushed into 2027,” Liew elaborates.
Eren Sengezer, FXStreet European Session Lead Analyst, shares a brief technical outlook for EUR/USD.
“EUR/USD’s near-term technical outlook points to a bullish stance that lacks strength. The Relative Strength Index (RSI) indicator on the daily chart holds above 50 but retreats after testing 60, and the pair struggles to pull away from the 20-day Simple Moving Average (SMA) despite closing well above it to end the previous week.”
“On the upside, the first resistance area aligns at 1.1800-1.1820, where the upper limit of the Bollinger Band and the Fibonacci 61.8% retracement of the February-April downtrend align. In case EUR/USD manages to stabilize above this region, 1.1900-1.1910 (round level, Fibonacci 78.6% retracement) could be seen as the next hurdle ahead of 1.2000 (psychological level).”
Looking south, a strong support area seems to have formed at 1.1730-1.1680 (Fibonacci 50% retracement, 100-day SMA, 200-day SMA). If EUR/USD drops below the lower limit of this range and starts using it as resistance, technical sellers could take action. In this case, 1.1660 (ascending trend line) could be seen as an interim support level before 1.1560 (Fibonacci 23.6% retracement).”
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 found in circulation alongside local notes. It is the most heavily traded currency in the world, accounting for over 88% of all global foreign exchange turnover, or an average of $6.6 trillion in transactions per day, according to data from 2022. Following the second world war, the USD took over from the British Pound as the world’s reserve currency. For most of its history, the US Dollar was backed by Gold, until the Bretton Woods Agreement in 1971 when the Gold Standard went away.
The most important single factor impacting on the value of the US Dollar is monetary policy, which is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability (control inflation) and foster full employment. Its primary tool to achieve these two goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, the Fed will raise rates, which helps the USD value. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates, which weighs on the Greenback.
In extreme situations, the Federal Reserve can also print more Dollars and enact quantitative easing (QE). QE is the process by which the Fed substantially increases the flow of credit in a stuck financial system. It is a non-standard policy measure used when credit has dried up because banks will not lend to each other (out of the fear of counterparty default). It is a last resort when simply lowering interest rates is unlikely to achieve the necessary result. It was the Fed’s weapon of choice to combat the credit crunch that occurred during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy US government bonds predominantly from financial institutions. QE usually leads to a weaker US Dollar.
Quantitative tightening (QT) is the reverse process whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing in new purchases. It is usually positive for the US Dollar.
(This story was updated on May 12 at 09:02 GMT to reflect a last-minute change in the monthly core CPI expected reading to 0.3% from 0.4%.)
MUFG’s Lee Hardman notes that the US Dollar’s (USD) rebound alongside higher Oil prices has lifted USD/JPY back towards 158.00, close to levels seen before suspected Japanese intervention. He highlights that authorities in Japan and the United States (US) are stressing close coordination on currency volatility, leaving the door open to further intervention while the Middle East conflict continues to weigh on markets.
Authorities keep intervention option open
"The rebound for the US dollar and the price of oil has helped to lift USD/JPY back up towards the 158.00-level overnight where the pair was trading prior to the last bout of suspected intervention from Japan on 6th May. It is making market participants nervous that Japan will step back in again soon to support the yen again."
"According to media reports Japan has spent around JPY10 trillion to support the yen, and further intervention will likely be required if the fundamentals factors that driven a weaker yen do not change soon. The Middle East conflict has triggered higher energy prices which have hurt Japan’s terms of trade, and yield spreads have moved against the yen recently as rate hikes have been priced in for other major central banks."
"After meeting with Finance Minister Katayama overnight, he posted “I am pleased to reaffirm the strong economic partnership between the US and Japan. The level of communication and coordination between our teams in addressing undesirable, excess volatility in currency markets continues to be constant and robust”. The comment indicates that the US remains supportive of Japanese intervention to support the yen."
"She believes that they have “full understanding” that intervention is among options for addressing excessive volatility in the foreign exchange market. It leaves the door open for further intervention to dampen yen weakness while the Middle East conflict remains unresolved."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
- US private employers added an average of 33K jobs per week in late April.
- Job gains gain extra momentum, building on the previous week’s gain.
Private-sector hiring in the US has added extra momentum in late April. According to the NER Pulse, the weekly companion to the ADP National Employment Report, companies added an average of 33K jobs per week in the four weeks ending April 25.
That marks a marginal uptick from the prior reading, hinting that the recent improvement in hiring may be picking up pace again.
Employment FAQs
Labor market conditions are a key element to assess the health of an economy and thus a key driver for currency valuation. High employment, or low unemployment, has positive implications for consumer spending and thus economic growth, boosting the value of the local currency. Moreover, a very tight labor market – a situation in which there is a shortage of workers to fill open positions – can also have implications on inflation levels and thus monetary policy as low labor supply and high demand leads to higher wages.
The pace at which salaries are growing in an economy is key for policymakers. High wage growth means that households have more money to spend, usually leading to price increases in consumer goods. In contrast to more volatile sources of inflation such as energy prices, wage growth is seen as a key component of underlying and persisting inflation as salary increases are unlikely to be undone. Central banks around the world pay close attention to wage growth data when deciding on monetary policy.
The weight that each central bank assigns to labor market conditions depends on its objectives. Some central banks explicitly have mandates related to the labor market beyond controlling inflation levels. The US Federal Reserve (Fed), for example, has the dual mandate of promoting maximum employment and stable prices. Meanwhile, the European Central Bank’s (ECB) sole mandate is to keep inflation under control. Still, and despite whatever mandates they have, labor market conditions are an important factor for policymakers given its significance as a gauge of the health of the economy and their direct relationship to inflation.
- EUR/USD retreats below 1.1750 after rejection at the 1.1790 area on Monday.
- Concerns about the resumption of hostilities in Iran are boosting the US Dollar on Tuesday.
- US CPI is expected to confirm that Iran's war boosted inflationary pressures in March.
The Euro (EUR) heads lower against the Dollar (USD) on Tuesday, trading right below 1.1750 at the time of writing, after another rejection at the 1.1790 area on Monday. Market concerns about the growing fragility of the US-Iran ceasefire are buoying the safe-haven US Dollar, which is drawing additional support from investors' caution ahead of the US Consumer Price Index (CPI) release.
Market sentiment soured on Tuesday following comments by US President Donald Trump affirming that the US-Iran ceasefire is on “life support”, and reports by the CNN news channel, citing some of his aides, stating that the US president is frustrated with the attitude of Iranian authorities and has brought the possibility of resuming combat operations back to the table.
In the US session, however, the highlight of the day will be the US Consumer Price Index (CPI) release. Consumer inflation is expected to have accelerated to a 3.7% yearly rate in April, its highest level since September 2023, confirming the inflationary impact of the Middle East war. Core inflation is seen rising to 2.7% year-on-year from 2.6% in March, with USD risk skewed to the upside, as higher-than-expected CPI figures might prompt more Federal Reserve Policymakers to jump on the hawkish side.
In the Eurozone, the ZEW Economic Sentiment Index released earlier on Tuesday revealed that institutional investors’ feelings about the German economy improved to -10.2 in May from -17.2 in April, against expectations of further deterioration, to -19.8. The sentiment about the current economic situation, however, has dropped to five-month lows at -77.8, from -73.7 in April, below the -77.5 market consensus. The impact of these figures on the Euro was marginal.
Technical analysis: Next support is at the 1.1725 area
EUR/USD's technical picture shows bearish momentum building up slowly on the 4-hour chart. The Relative Strength Index (RSI) around 47 hints at fading bullish pressure, while the Moving Average Convergence Divergence (MACD) has slipped marginally into negative territory, suggesting that upside momentum is waning.
On the downside, the first notable support comes in at Friday's low, about 1.1725, ahead of a key support area between 1.1645 and 1.1675, which halted sellers several times in April. On the topside, the resistance area between 1.1790 and 1.1800 (May 1, 6, and 8 highs) is expected to test upside attempts ahead of April's peak, at the 1.1850 area.
(The technical analysis of this story was written with the help of an AI tool.)
Economic Indicator
Consumer Price Index (YoY)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Next release: Tue May 12, 2026 12:30
Frequency: Monthly
Consensus: 3.7%
Previous: 3.3%
Source: US Bureau of Labor Statistics
The US Federal Reserve (Fed) has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.
Economic Indicator
Consumer Price Index ex Food & Energy (YoY)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as the Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The CPI Ex Food & Energy excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures. Generally speaking, a high reading is bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Next release: Tue May 12, 2026 12:30
Frequency: Monthly
Consensus: 2.7%
Previous: 2.6%
Source: US Bureau of Labor Statistics
The US Federal Reserve has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.
Forex Market News
Our dedicated focus on forex news and insights empowers you to capitalise on investment opportunities in the dynamic FX market. The forex landscape is ever-evolving, characterised by continuous exchange rate fluctuations shaped by vast influential factors. From economic data releases to geopolitical developments, these events can sway market sentiment and drive substantial movements in currency valuations.
At Rakuten Securities Hong Kong, we prioritise delivering timely and accurate forex news updates sourced from reputable platforms like FXStreet. This ensures you stay informed about crucial market developments, enabling informed decision-making and proactive strategy adjustments. Whether you’re monitoring forex forecasts, analysing trading perspectives, or seeking to capitalise on emerging trends, our comprehensive approach equips you with the insights needed to navigate the FX market effectively.
Stay ahead with our comprehensive forex news coverage, designed to keep you informed and prepared to seize profitable opportunities in the dynamic world of forex trading.
