CPI

Sentiment received a boost today as February inflation came in cooler than anticipated, propelling stocks higher after two days of steep declines. Techs were leading the charge with Nvidia up 6.7% and Tesla up 8% at the time of writing. Can the tech megacaps lead a market recovery and boost the short-term S&P 500 forecast?

Despite recovering post CPI and remaining on the front-foot in the last couple of days, the USD/JPY forecast remains mildly bearish in light of the weakness in US data and after the greenback suffered its worst weekly performance since November 2022 last week.

The US CPI is expected to narrow to 2.9% in February from 3.0% per annum the month prior, with the core rate also anticipated to fall to 3.2% from 3.3% during the same period.

EUR/USD, Dow Jones Forecast: EUR/USD extends to a new 2025 high above 1.09, while the Dow rebounds from its 41,600-neckline ahead of the U.S. CPI report on Wednesday.

USD/JPY is testing a logical support zone for a bounce if we see an as-expected or hotter-than-expected inflation reading.

The upcoming US CPI data and ongoing trade war developments are expected to be the key drivers of market movements this week. Chinese deflation risks further fuel concerns about a global decline in economic confidence.

The dollar’s failure to rally on the back of the latest trade tariffs and US inflation data from last week, you do have to wonder whether the greenback has formed at least a near-term peak. For that reason, the cable may still be able to recover despite being lower today. So, we maintain a cautiously positive GBP/USD outlook for now

The focus for is now turning to data with the release of US CPI today, PPI tomorrow and retail sales on Friday. The USD/JPY will get a boost should inflation data surprise to the upside.

GBP/USD Forecast: This week brings notable UK economic indicators, including GDP, inflation, and retail sales, alongside the key catalyst: U.S. CPI data. These events are set to shed light on the pound’s struggles with pressured lows against the dollar.

Crude Oil Week Ahead: Crude oil remains on a bullish track this year, reaching 4-month highs. Next week, key inputs such as Chinese economic data, shifts in Fed rate expectations, and OPEC and IEA monthly reports are expected to shape the still range-bound direction of oil prices.

Bond yields and AUD/USD had a different take on today's inflation figures. And on this occasion, I believe forex traders are in the right. And if the Aussie can withstand the strength of the US dollar, it could bode well for bears seeking a cheeky EUR/AUD short.

EURUSD Forecast: The EUR/USD enters 2025 on a bearish note following a sharp downturn at the end of 2024. However, extreme oversold levels hint at potential bullish reversals. Key market-moving factors, including Eurozone inflation data and U.S. Non-Farm Payrolls, are in focus this week, adding volatility risks.

Showcasing the GBP strength is the struggling EUR/GBP. With the latter testing the 0.82 support area, sterling is therefore trading at its best levels since March 2022 against the euro. But against the dollar, it has been held back. In fact, I reckon there is a good chance we may see the GBP/USD start to head lower again and may even go on to break 1.2500 support, once UK’s services inflation eases more significantly - possibly in early next year. If seen, that would allow the BoE to turn more dovish. So, the GBP/USD outlook remains bearish heading into 2025.

EURUSD, DXY Forecast: the final reports for the economic calendar’s major events, including the US CPI and FOMC meeting, are due between today and next Wednesday, setting 2024’s final volatility wave ahead of the holidays and 2025’s narrative.

USD/JPY rallies to a fresh monthly high (152.18) ahead of the update to the US Consumer Price Index (CPI).

The Fed is likely to cut interest rates by 25bps regardless of the CPI reading, though a hotter-than-expected print could certainly raise some questions for USD/CAD

USDJPY, Dow, Nasdaq Analysis: With forecasts pointing to an uptick in US inflation rates and overbought conditions in US indices, a critical wave of volatility is anticipated ahead of the holidays.