Inflation in the United States (US), as measured by the change in the Consumer Price Index (CPI), declined to 2.4% on a yearly basis in March from 2.8% in February, the US Bureau of Labor Statistics (BLS) reported on Thursday. This reading came in below the market expectation of 2.6%.
Follow our live coverage of the US inflation data and market reaction.
The core CPI, which excludes volatile food and energy prices, rose 2.8% on a yearly basis. This print followed the 3.1% increase recorded in February and came in below analysts' estimate of 3%. On a monthly basis, the CPI declined 0.1%, while the core CPI rose 0.1%.
Market reaction to US Consumer Price Index data
The US Dollar came under renewed bearish pressure with the immediate reaction to soft inflation data. At the time of press, the US Dollar Index was down 1.35% on the day at 101.50.
US Dollar PRICE Today
The table below shows the percentage change of US Dollar (USD) against listed major currencies today. US Dollar was the weakest against the Swiss Franc.
| USD | EUR | GBP | JPY | CAD | AUD | NZD | CHF | |
|---|---|---|---|---|---|---|---|---|
| USD | -1.56% | -0.74% | -1.86% | -0.17% | -0.78% | -1.32% | -2.39% | |
| EUR | 1.56% | 0.60% | -0.32% | 1.38% | 0.76% | 0.21% | -0.87% | |
| GBP | 0.74% | -0.60% | -0.90% | 0.78% | 0.14% | -0.40% | -1.58% | |
| JPY | 1.86% | 0.32% | 0.90% | 1.70% | 1.07% | 0.49% | -0.44% | |
| CAD | 0.17% | -1.38% | -0.78% | -1.70% | -0.63% | -1.16% | -2.34% | |
| AUD | 0.78% | -0.76% | -0.14% | -1.07% | 0.63% | -0.54% | -1.64% | |
| NZD | 1.32% | -0.21% | 0.40% | -0.49% | 1.16% | 0.54% | -1.17% | |
| CHF | 2.39% | 0.87% | 1.58% | 0.44% | 2.34% | 1.64% | 1.17% |
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 Consumer Price Index (CPI) data at 03:00 GMT.
- The US Consumer Price Index is forecast to rise 2.6% YoY in March.
- The core CPI inflation is seen a tad lower at 3% last month.
- The inflation data could influence the Fed’s rate outlook and the US Dollar’s performance.
The United States (US) Bureau of Labor Statistics (BLS) is set to publish the high-impact Consumer Price Index (CPI) inflation report for March on Thursday at 12:30 GMT.
The CPI figures could notably impact the US Dollar (USD) and the Federal Reserve’s (Fed) monetary policy outlook.
What to expect in the next CPI data report?
As measured by the CPI, inflation in the US is set to rise at an annual pace of 2.6% in March, down slightly from the 2.8% reported in February. Core CPI inflation, which excludes the volatile food and energy categories, is expected to ease to 3% in the same period from a year earlier, compared to a 3.1% growth in the previous month.
On a monthly basis, the CPI and the core CPI are projected to rise 0.1% and 0.3%, respectively.
Previewing the report, analysts at TD Securities noted: “We expect this week's CPI report to show that core inflation maintained a still firm 0.26% m/m pace in March following the cooler than expected expansion in the last report. In the details, we look for goods inflation to cool down after two consecutive firm increases while services prices likely gained some momentum.”
“In terms of the headline, we project CPI inflation to ease again to a mild 0.07% m/m in March, led by a considerable contraction in the energy component. We also expect food inflation to lose additional momentum, printing flat m/m,” TD Securities analysts added.
How could the US Consumer Price Index report affect EUR/USD?
Markets are growing increasingly concerned over the US economy tipping into recession due to expectations of the global trade conflict triggered by US President Donald Trump’s aggressive tariffs weighing heavily on economic activity. In turn, the Federal Reserve (Fed) is now projected to take a dovish turn. According to the CME FedWatch Tool, markets are currently pricing in about a 37% probability of the Fed lowering the policy rate by 25 basis points (bps) at the May policy meeting, up from 10% on April 1.
Fed policymakers, however, put more emphasis on the potential impact of tariffs on inflation rather than the growth outlook in their recent speeches. "The Fed's obligation is to make certain that a one-time increase in price levels doesn't become an ongoing inflation problem,” Fed Chairman Jerome Powell said. Similarly, San Francisco Fed President Mary Daly said that she is concerned that inflation may pick back up from tariffs, while Chicago Fed President Austan Goolsbee noted that there is anxiety among businesses that high inflation will return.
The market positioning suggests that the USD is facing a two-way risk heading into the inflation data release. A stronger-than-expected annual headline CPI print could feed into expectations for a Fed policy hold in May and boost the USD with the immediate reaction. On the other hand, a reading at or below 2.5% in this data could weigh on the USD and help EUR/USD continue to push higher.
Eren Sengezer, European Session Lead Analyst at FXStreet, offers a brief technical outlook for EUR/USD and explains:
“The Relative Strength Index (RSI) indicator on the daily chart holds above 60 and EUR/USD trades above the 20-day Simple Moving Average (SMA) after testing this level several times in the past week, reflecting a bullish bias in the near term.
“On the upside, 1.1150 (static level) aligns as the next resistance before 1.1200 (static level) and 1.1275 (July 2023 high). Looking south, the first support could be spotted at 1.0880 (20-day SMA) ahead of 1.0800 (static level) and 1.0740 (200-day SMA).
Tariffs FAQs
Tariffs are customs duties levied on certain merchandise imports or a category of products. Tariffs are designed to help local producers and manufacturers be more competitive in the market by providing a price advantage over similar goods that can be imported. Tariffs are widely used as tools of protectionism, along with trade barriers and import quotas.
Although tariffs and taxes both generate government revenue to fund public goods and services, they have several distinctions. Tariffs are prepaid at the port of entry, while taxes are paid at the time of purchase. Taxes are imposed on individual taxpayers and businesses, while tariffs are paid by importers.
There are two schools of thought among economists regarding the usage of tariffs. While some argue that tariffs are necessary to protect domestic industries and address trade imbalances, others see them as a harmful tool that could potentially drive prices higher over the long term and lead to a damaging trade war by encouraging tit-for-tat tariffs.
During the run-up to the presidential election in November 2024, Donald Trump made it clear that he intends to use tariffs to support the US economy and American producers. In 2024, Mexico, China and Canada accounted for 42% of total US imports. In this period, Mexico stood out as the top exporter with $466.6 billion, according to the US Census Bureau. Hence, Trump wants to focus on these three nations when imposing tariffs. He also plans to use the revenue generated through tariffs to lower personal income taxes.
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