Forex News
Annual inflation in the United States (US), as measured by the change in the Personal Consumption Expenditures (PCE) Price Index, remained unchanged at 3.7% YoY in July, the US Bureau of Economic Analysis (BEA) reported on Wednesday. This reading came in above the market expectation of 3.6%. In this period, the core PCE Price Index, which excludes volatile food and energy prices, held steady at 3.3%, as anticipated.
On a monthly basis, the PCE Price Index and the core PCE Price Index both rose by 0.2%.
Other details of the publication showed that Personal Income grew 0.4% on a monthly basis, compared to the market expectation of 0.3%, while Personal Spending increased 0.2%.
Market reaction to US PCE inflation data
The US Dollar (USD) Index edged slightly higher with the immediate reaction to the data and was last seen rising 0.13% on the day at 99.03.
US Dollar Price Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the strongest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | 0.08% | 0.24% | -0.06% | 0.17% | -0.28% | 0.37% | 0.39% | |
| EUR | -0.08% | 0.16% | -0.15% | 0.10% | -0.35% | 0.29% | 0.31% | |
| GBP | -0.24% | -0.16% | -0.32% | -0.07% | -0.51% | 0.15% | 0.15% | |
| JPY | 0.06% | 0.15% | 0.32% | 0.24% | -0.21% | 0.45% | 0.45% | |
| CAD | -0.17% | -0.10% | 0.07% | -0.24% | -0.45% | 0.22% | 0.22% | |
| AUD | 0.28% | 0.35% | 0.51% | 0.21% | 0.45% | 0.67% | 0.66% | |
| NZD | -0.37% | -0.29% | -0.15% | -0.45% | -0.22% | -0.67% | 0.00% | |
| CHF | -0.39% | -0.31% | -0.15% | -0.45% | -0.22% | -0.66% | -0.00% |
The heat map shows percentage changes of major currencies against each other. The base currency is picked from the left column, while the quote currency is picked from the top row. For example, if you pick the US Dollar from the left column and move along the horizontal line to the Japanese Yen, the percentage change displayed in the box will represent USD (base)/JPY (quote).
This section below was published as a preview of the US Personal Consumption Expenditures (PCE) Price Index data at 08:30 GMT.
- US core Personal Consumption Expenditures Price Index is expected to have grown at a 3.3% year-on-year rate in July.
- Headline PCE monthly inflation is seen ticking up 0.1% in July, reversing June’s 0.1% contraction.
- Traders are likely to wait for Federal Reserve’s Warsh speech at Jackson Hole to make investment decisions.
The United States (US) Bureau of Economic Analysis (BEA) is expected to publish the Personal Consumption Expenditures (PCE) Price Index data for July on Wednesday, at 12:30 GMT.
The PCE Price Index is one of the most relevant indicators for financial markets, as it is the Federal Reserve’s (Fed) gauge of choice to assess inflationary trends and, therefore, to decide its monetary policy.
On Wednesday, the US PCE Price Index release will be accompanied by the first estimate of Q2 Gross Domestic Product (GDP) and Durable Goods Orders, which might tame the Forex impact of inflationary data.
Anticipating the US PCE: Insights into the Federal Reserve's key inflation metric
In general terms, PCE inflation data for July is expected to reveal that price pressures remain high, well above the Fed’s 2% target, buoyed by high energy prices, with the Middle East conflict in a labyrinth, with no end in sight.
The core PCE Price Index – the most relevant figure from a monetary policy perspective, as it strips the seasonal influence of food and energy prices – is seen accelerating to 0.2% month-over-month (MoM) in July, from 0.1% in June, and remaining steady at 3.3% since July last year. These are still levels below May’s 3.4% YoY peak, but also well above the Fed’s target.
Investors are likely to analyse these figures carefully to get some clues about the US central bank’s monetary policy. The reaction to the data, however, is likely to be muted. The main focus will remain on the Jackson Hole central bankers' meeting on Friday, where the Fed Chairman Kevin Warsh is expected to provide further insights on the bank’s near-term policy despite his reluctance to provide forward guidance.
Strategists at DBS Bank see the Jackson Hole Symposium as an important test for the Fed’s Chairman, as, in their opinion, his rejection of forward guidance has “contributed to increased market volatility.”
They argue that Warsh now needs to spell out “how a Fed without forward guidance intends to anchor expectations, how much tightening the Fed is prepared to tolerate through long-term yields, and the policy boundary between the Fed and the Treasury,” with clarity on these points seen as critical for investors trying to assess the evolving policy mix.
As of this writing, bets on an interest rate hike in September are declining. Futures markets are pricing a 38% chance of a quarter-point rate hike next month, down from 55% one month ago, according to data from the CME FedWatch Tool. The central bank’s lack of guidance seems to have triggered doubts about Warsh’s commitment to fight inflation. It will be interesting to see if a strong reading on Wednesday changes this view.
How will the US Personal Consumption Expenditures Price Index affect EUR/USD?
The US Dollar (USD) is struggling to regain lost ground this week, following sharp declines earlier in August, crushed by a mix of downbeat employment figures, the dovish repricing of the Fed’s monetary policy, and a plan by the US Treasury to boost repurchases of long-dated securities.
The US Dollar Index (DXY), which measures the value of the Greenback against a basket of six major currencies, is 0,75% down on the month and more than 2.5% below the late July top. Against this background, it seems rather unlikely that Wednesday’s PCE Price Index figures alone can lift the US Dollar without a clear backing from the Fed.
According to OCBC’s Analysts, the USD needs that “Warsh and other Fed officials push back against emerging debasement concerns and reinforce their commitment to returning inflation to the Fed's 2% target” to find any significant support.
Regarding EUR/USD, Guillermo Alcalá, FX Analyst at FXStreet, sees the Euro steady near three-month highs, consolidating gains after a 2.5% rally in the current month.
EUR/USD Daily Chart
Recent price action shows a mild pullback, as the pair has reached overbought levels in most timeframes, but the near-term bias remains constructive, above the key 200-day Simple Moving Average (SMA). Momentum indicators on the daily chart endorse the bullish view, with the Relative Strength Index in the 70.00 area at the time of writing, and the Moving Average Convergence Divergence (MACD) well above the zero level.
Upside attempts have been capped below the 78.2% Fibonacci retracement of the May-June selloff, in the 1.1700 area. A bullish move above here exposes the early-May highs, near 1.1790.
On the downside, the area between the mentioned 200-day SMA, at 1.1630, and the previous resistance area around 1.1615 is likely to challenge bears. Further down, the August 19 low, at 1.1570, might provide some support ahead of the early August lows, just above 1.1500.
Economic Indicator
Core Personal Consumption Expenditures - Price Index (YoY)
The Core Personal Consumption Expenditures (PCE), released by the US Bureau of Economic Analysis on a monthly basis, measures the changes in the prices of goods and services purchased by consumers in the United States (US). The PCE Price Index is also the Federal Reserve’s (Fed) preferred gauge of inflation. The YoY reading compares the prices of goods in the reference month to the same month a year earlier. The core reading excludes the so-called more volatile food and energy components to give a more accurate measurement of price pressures." Generally, a high reading is bullish for the US Dollar (USD), while a low reading is bearish.
Read more.Next release: Wed Aug 26, 2026 12:30
Frequency: Monthly
Consensus: 3.3%
Previous: 3.3%
Source: US Bureau of Economic Analysis
After publishing the GDP report, the US Bureau of Economic Analysis releases the Personal Consumption Expenditures (PCE) Price Index data alongside the monthly changes in Personal Spending and Personal Income. FOMC policymakers use the annual Core PCE Price Index, which excludes volatile food and energy prices, as their primary gauge of inflation. A stronger-than-expected reading could help the USD outperform its rivals as it would hint at a possible hawkish shift in the Fed’s forward guidance and vice versa.
Fed FAQs
Monetary policy in the US is shaped by the Federal Reserve (Fed). The Fed has two mandates: to achieve price stability and foster full employment. Its primary tool to achieve these goals is by adjusting interest rates. When prices are rising too quickly and inflation is above the Fed’s 2% target, it raises interest rates, increasing borrowing costs throughout the economy. This results in a stronger US Dollar (USD) as it makes the US a more attractive place for international investors to park their money. When inflation falls below 2% or the Unemployment Rate is too high, the Fed may lower interest rates to encourage borrowing, which weighs on the Greenback.
The Federal Reserve (Fed) holds eight policy meetings a year, where the Federal Open Market Committee (FOMC) assesses economic conditions and makes monetary policy decisions. The FOMC is attended by twelve Fed officials – the seven members of the Board of Governors, the president of the Federal Reserve Bank of New York, and four of the remaining eleven regional Reserve Bank presidents, who serve one-year terms on a rotating basis.
In extreme situations, the Federal Reserve may resort to a policy named 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 during crises or when inflation is extremely low. It was the Fed’s weapon of choice during the Great Financial Crisis in 2008. It involves the Fed printing more Dollars and using them to buy high grade bonds from financial institutions. QE usually weakens the US Dollar.
Quantitative tightening (QT) is the reverse process of QE, whereby the Federal Reserve stops buying bonds from financial institutions and does not reinvest the principal from the bonds it holds maturing, to purchase new bonds. It is usually positive for the value of the US Dollar.
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