Markets are closely watching the upcoming US Consumer Price Index (CPI) report for October, set to be released at 8:30 ET (13:30 GMT) on Tuesday, November 10. Analysts expect headline inflation to rise by 0.3% month-over-month, bringing the year-over-year figure to 3.9%. Core CPI, which excludes volatile food and energy prices, is projected to increase by 0.2% month-over-month, resulting in a 2.8% annual rate.
With traders currently pricing in an 80% chance of a Federal Reserve rate hike next month, the CPI report could either solidify or challenge these expectations. A significant downside surprise in inflation would be needed to drive substantial market volatility, given the current consensus.
The EUR/USD pair is currently hovering in the middle of its five-week consolidation range, spanning 200 pips. The pair’s recent downtrend from September appears to be correcting through time rather than price, with the 14-day RSI gradually reverting from oversold territory to neutral. A breakdown below support at 1.1100 could signal further declines, while a cooler-than-expected CPI reading might push the pair back toward resistance near 1.1270.
Recent economic data, including a stronger-than-expected nonfarm payrolls report and rising average hourly earnings, has heightened inflation concerns. The Fed’s preferred inflation gauge, Core PCE, remains above the 2% target, and leading indicators suggest further upside risks. The CPI report will be closely scrutinized, particularly the core and supercore readings, which exclude food, energy, and housing costs.