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Markets Eye CPI as Dollar Extends Weekly Decline

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EUR/USD rebounds from 1.1700 with 1.1900 back in focus

The dollar weakened on Friday after the release of the Non-Farm Payrolls, marking the second week of declines against its major peers. The US Dollar Index (DXY), which tracks the dollar’s performance against 6 currencies, ended the week at 97.84 after reaching as high as 98.57.

The NFP showed that 115K new jobs were created during the previous month, which far exceeded the forecast of only 65K jobs. With the labor market on the right track, the Fed will now focus on the other part of its mandate: inflation. Currently, the Fed is in a ‘wait and see’ stance, with no rate cuts scheduled for the near future, according to the CME FedWatch tool.

At least for now, there are no major inflationary risks, which lowers the probability of a rate hike. However, the US Consumer Price Index (CPI) will be released this week, which could change the odds of a rate change.

Economic Calendar Highlights

The first major release of the week will be the US Consumer Price Index (CPI), scheduled for Tuesday at 12:30 pm GMT. The Core version is expected to change 0.3% from the previous 0.2%, while the headline figure is expected to show a decrease from 0.9% to 0.6%. The yearly CPI will climb to 3.7% from 3.3%, according to analysts’ expectations.

The Producer Price Index will be released on Wednesday at 12:30 pm GMT, showing changes in the prices that producers ask for their goods and services. The indicator has inflationary implications because a higher producer price will eventually be paid by the consumer.

The last notable release of the week will be the US Retail Sales report, scheduled for Thursday at 12:30 pm GMT. Sales made at retail levels represent the main part of consumer spending, which in turn accounts for the biggest part of the overall economic activity of the country.

Technical Outlook – EUR/USD

Since mid-2025, the pair has been stuck in a range between 1.1400 and 1.1900. Currently, it is headed towards the top of the range after successfully bouncing off 1.1700 support.

The RSI is heading up, without being overbought, but the Bollinger Bands are tightly squeezed together, showing a lack of momentum. Short-term control belongs to the bulls, but this can quickly change, depending on the geopolitical developments in the Middle East.

A move below the current support (1.1700) would make 1.1600 the first destination, while to the upside, the first target is 1.1900. If the price reaches this limit, we will likely see a pullback as the RSI would likely enter overbought territory by then.