News & Analysis / Analysis / Inflation Data Sharply Strengthens the US Dollar

Inflation Data Sharply Strengthens the US Dollar

FXOpen

Data on consumer prices and core inflation published yesterday exceeded expectations. According to ForexFactory:

→ Core CPI in monthly terms: actual = 0.4%, expected = 0.3%, a month ago = 0.4%;
→ CPI in annual terms: actual = 3.5%, forecast was = 3.4%, previous value = 3.2% with a target value of 2%.

As a result of the publication of news, market participants' expectations that the Federal Reserve will leave rates unchanged in June have sharply increased. According to the CME FedWatch Tool, before the publication of news about inflation, the probability of this was = 42.6% (that is, the majority believed that there would be a rate cut), then after the publication the probability = 83.0%. This is a dramatic change in sentiment.

Speaking to Bloomberg, former US Treasury Secretary Larry Summers said cutting rates in June would be a dangerous and egregious mistake, adding: "You have to take seriously the possibility that the next rate move will be upwards rather than downward." .

The reaction of financial markets was the strengthening of the US dollar in the context of tight monetary policy, the effect of which will last longer:
→ USD has risen in price in currency pairs — for example, USD/CHF has risen to its maximum in six months;
→ Bitcoin fell in price, but this morning the main cryptocurrency has already recovered from yesterday’s fall;
→ gold tested support at 2,320.

Stock markets have also come under pressure. Technical analysis of the Nasdaq-100 chart shows that:
→ the price is moving along an upward trajectory (shown by blue lines), but its rounding indicates that the forces of demand (which were largely based on expectations of lower interest rates) are being exhausted;
→ also the weakness of demand is indicated by the fact that the NASDAQ price cannot overcome the resistance of 18,400 to reach the upper blue line;
→ as a result of yesterday's news, the index dropped to the lower blue line, which acts as support.

It is possible that in the near future the market will be in consolidation between the levels of 17,800 and 18,400, shifting the focus to the beginning of the reporting season of companies for the first quarter of 2024.

Trade global index CFDs with zero commission and tight spreads. Open your FXOpen account now or learn more about trading index CFDs with FXOpen.

This article represents the opinion of the Companies operating under the FXOpen brand only. It is not to be construed as an offer, solicitation, or recommendation with respect to products and services provided by the Companies operating under the FXOpen brand, nor is it to be considered financial advice.

Stay ahead of the market!

Subscribe now to our mailing list and receive the latest market news and insights delivered directly to your inbox.

forex

Instrument
Live ECN bid
Live ECN ask
Action
EURUSD
1.10342
1.10344
Trade
GBPUSD
1.31717
1.31718
Trade
AUDUSD
0.63420
0.63421
Trade
USDJPY
146.536
146.538
Trade
USDCAD
1.41527
1.41531
Trade
More
Index CFD Trading with FXOpen

Index CFD Trading with FXOpen

Experience ECN technology for deep liquidity and light-speed trade execution

  • Trade with tight spreads
  • Take advantage of zero commission
  • Choose from 4 trading platforms: MT4, MT5, TradingView, or TickTrader
Learn more

Latest articles

Forex Analysis

USD/CHF Falls to Its Lowest Level in Nearly Five Months

Today, the exchange rate of one US dollar against the Swiss franc dropped below 0.87000 francs—its lowest level since early November 2024.

Since the start of 2025, the USD/CHF pair has declined by more than 4%.

Why

Indices

S&P 500 Index Hits 2025 Low Following Trump's Tariff Announcement

As shown on the S&P 500 Index (US SPX 500 mini on FXOpen) chart, the benchmark US stock index dropped below 5,450 points for the first time in 2025. This decline reflects the US stock market’s

Forex Analysis

Interest in the Dollar Declines Amid Trump's Escalating Trade Wars

The tariffs introduced by Trump yesterday on imports from various countries—20% on the EU, 34% on China, and 46% on Vietnam—have heightened uncertainty in the currency markets. As expected, these measures have contributed to increased volatility in major

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 60% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work, and whether you can afford to take the high risk of losing your money.