EURUSD gain strength all eyes on CPI.
EURUSD currency pair jumped back above the psychologically important 1.1000 level after a whirlwind trading session. On Wednesday, the euro-dollar pair experienced extreme volatility, swinging between 1.1095 and 1.0913, before settling stronger by Thursday morning near 1.1050.
What caused the turbulence? A surprise move by US President Donald Trump, who announced a 90-day pause on reciprocal tariffs and capped them at a flat 10% for all countries. This decision came after several influential voices—like Elon Musk and hedge fund manager Bill Ackman—warned that escalating trade tensions were rattling global markets and investor confidence.
The result? A brief market euphoria. US equities soared, signaling relief, while the euro gained ground as investor appetite returned. But with March US CPI (Consumer Price Index) data on the horizon, traders are now refocusing their attention on inflation trends and the Federal Reserve’s next move.
US CPI, Fed Speeches, and Jobs Data Steer the Market
Thursday packed with major US economic updates. Here’s what’s lined up and why it matters:
1. US CPI Report – Key Inflation Insights
Time: 12:30 GMT
Headline inflation is expected to drop to 0.1% (MoM), down from 0.2% in February. On a yearly basis, it’s forecasted to decline from 2.8% to 2.6%.
Core inflation, which strips out food and energy, is projected to tick up to 0.3% (MoM). However, yearly core inflation might ease slightly to 3.0% from 3.1%.
Why this matters: Lower inflation may reinforce market hopes for Federal Reserve rate cuts later this year. But if core inflation proves sticky, it could delay any easing.
2. Jobless Claims – Labor Market Checkpoint
Also at 12:30 GMT, the US weekly jobless claims data is set to be released:
Initial claims are expected to rise modestly to 223,000 from 219,000.
Continuing claims are forecast to fall to 1.88 million, down from 1.903 million last week.
Why this matters: A tight labor market may keep wages and inflation elevated, which could cause the Fed to stay cautious on rate cuts.
3. Fed Speeches – Policy Hints from Key Officials
Markets will closely watch speeches from top Fed officials throughout the day:
13:30 GMT: Dallas Fed President Lorie Logan
14:00 GMT: Fed Governor Michelle Bowman (Senate testimony)
16:00 GMT: Chicago Fed President Austan Goolsbee
16:30 GMT: Philadelphia Fed President Patrick Harker (Fintech panel)
These speeches might drop hints about the Fed’s rate strategy, inflation outlook, and economic risks.
Equities React and Bond Yields Search for Direction
After Trump’s announcement on Wednesday, European stocks rallied hard, gaining over 5%, while US futures dipped slightly, signaling some skepticism about the durability of the rally.
Meanwhile, bond yields remain range-bound:
The US 10-year Treasury yield is hovering around 4.29%, seeking clear direction.
Investors seem cautious, waiting for CPI confirmation before committing to either bullish or bearish bets.
FedWatch Update: Rate Cut Hopes Recalibrated
According to the CME FedWatch Tool, here’s how expectations for interest rate cuts have shifted:
May 2025 meeting: Only 19.5% chance of a rate cut (down from 44.6% just days ago)
June 2025 meeting: 75.3% chance of a rate cut remains priced in
The reduction in May expectations shows that markets are more aligned with a “wait and see” approach, depending on inflation and labor market data.
EURUSD Technical Outlook: Room to Run?
Technically speaking, EURUSD’s move back above 1.1000 is significant. This zone has historically acted as a key support and resistance region, and holding it could pave the way for a rally toward the 1.1500 range—provided inflation cooperates and Fed remains dovish.
Momentum indicators suggest that buying pressure is returning. However, any surprise CPI upside or hawkish Fed commentary could trigger another wave of volatility.
