Dollar stays more muted so far today amid lack of any post-CPI momentum
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
Société Générale | Bearish | 1.1400 |
Scotiabank | Bearish | 1.1200 |
Commerzbank | Bullish | 1.2200 |
From the original
The US CPI report for July yesterday fell within expectations and that is perhaps the last thing traders were hoping for this week. While it set the tone that inflation isn't exactly running hot, it is not enough to discount the possibility of the Fed still needing to raise inter
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The market reacted to a softer-than-expected US CPI print by pushing the DXY dollar index down by 0.5%, signaling a recalibration of Fed tightening expectations. Per the full note from ING, this release has prompted a 10bp reduction in projected Fed rate increases, reflective of market sentiment that a pause in rate hikes is more plausible. Additionally, various high-yield commodity currencies are poised to benefit from this inflation backdrop. This sentiment comes ahead of today's PPI data and further Federal Reserve commentary, which may reinforce or mitigate the dollar’s current trajectory.
FX Daily: Boring CPI, boring August?
The desk posits that the recent lackluster CPI data in the U.S. has instilled a sense of directionless trading within the FX markets as we approach the Jackson Hole Symposium. Per the full note, the unexciting 0.1% headline and 0.2% core CPI prints did little to clarify market expectations, resulting in a stronger dollar amidst hawkish positioning. Despite some dovish repricing in Fed rate expectations trimming 5bps for September, there's still 9bps priced in, indicating ongoing bullish sentiment toward the dollar. This sentiment aligns with current market consensus, which has the EUR/USD trading around 1.1419, with predictions ranging up to 1.2000 by mid-2026.