Octa's research: inflation in the U.S. is still a concern.
- CPI data for March will be released on 10 April 2024. Concerns remain that inflation will continue to rise.
- According to Fed Chairman Jerome Powell, rising prices largely align with expectations.
- The continued rise in U.S. consumer inflation strengthens the U.S. dollar. The main target for EURUSD is 1.0730–1.0740.
The U.S. Bureau of Labor Statistics will release the Consumer Price Index (CPI) report on Wednesday, 10 April.
The latest U.S. inflation report showed that rising prices continue to pressure U.S. consumers. The annual consumer inflation in February 2024 ticked higher to 3.2%, above forecasts that January's 3.1% level would remain. More than two-thirds of this increase is due to rising housing and petrol prices which means that the Fed is far from achieving its 2% inflation target.
'Investors should not be so upset about rising inflation as the data is largely in line with market expectations, as also reported by the Fed Chairman in his speech last week', said Kar Yong Ang, the Octa financial market analyst. 'However, the rise in energy prices will continue to weigh on the index components,' he added.
With consumer inflation in the U.S. continuing to grow, the probability of interest rate cuts is decreasing, giving more power to the U.S. dollar. For currency market participants, this means that EURUSD may keep declining for a few days after the publication of inflation data and target 1.0730–1.0740.
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