US CPI Keeps Forex Markets Steady as Traders Await Fed Decision

The markets in the forex market remained stable following the release of the US Consumer Price Index in September, since the figures were as predicted by the analysts. Nevertheless, with this, and recent job and producer price reports, traders have not been strongly committed in either direction, keeping major currencies within tight ranges.

The focus has now shifted squarely to the US Federal Reserve meeting that is to be held on September 17. Previous discussions of a potential 50-basis-point rate reduction have been reduced to virtually nil. Instead, markets are betting on a smaller 25-point cut, which has already been priced in to a large extent.

The CPI report indicated that it increased by 0.3% and it was not a significant move, but it has made investors reconsider the risk of inflation, particularly through tariffs. These tariff pressures are already beginning to trickle into costs, although the market response is that traders believe their long-term effect is less significant than they had once imagined. This has made the US bond yield curve flat, and traders remain wary.

Currency pairs are holding major technical levels. The US dollar versus the yen is around its mid-range, with the support level being around 146.50 and the resistance level being around 149.50. The Australian dollar has been performing well since August, and it has been testing above 0.6620 to 0.6650. The euro did not manage to rise higher and is currently floating between 1.1600 and 1.1750.

The Swiss franc is trying to move above its moving average, and the next step would determine whether it would recover or fall. Sterling is still trapped between 1.3400 and 1.3600, and the Canadian dollar lacks momentum and can revert to average levels in the near future.

On the whole, traders are waiting until the Fed makes its announcement. As the inflation rates are in line with the forecasts, the next major change in the market will be determined by how the central bank leads the future policy and how the global tariff pressures will be realized in the months to come.

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