Today's US CPI report for February 2026 showed inflation holding steady at 2.4% annually and 0.3% monthly, in line with forecasts. Core CPI matched expectations at 2.5% annual, signaling progress toward the Fed's 2% target but no urgency for cuts. This data, released amid the US-Israel-Iran war's early stages, bolsters the dollar as resilient growth tempers easing bets.
The steady print reduces rate cut odds for March 17-18 FOMC, supporting USD against majors. War-driven oil spikes add inflation risks, delaying dovish shifts and favoring dollar haven flows. Global growth slows on energy costs, pressuring emerging currencies.
EUR/USD: Dollar Dominance Caps Euro Gains
EUR/USD around 1.18 eyes modest upside if ECB holds firm, but steady CPI and war inflation keep dollar strong. Expect consolidation with downside bias.
- Expected range late March: 1.17-1.19
- Factors: Fed pause vs ECB dovishness; war boosts USD flows.
USD/JPY: Yen Safe-Haven Clashes with Dollar Yield Edge
USD/JPY near 158 faces pullback on yen demand from war risks, but CPI supports yields and carry trades. Mild upside likely.
- Expected range late March: 157-159
- Factors: BoJ dovish vs Fed hold; geo-tensions favor yen short-term.
GBP/USD: Pound Pressured by Inflation Fears
GBP/USD at 1.35 vulnerable to BoE easing signals amid war energy costs. Steady CPI reinforces dollar rally.
- Expected range late March: 1.34-1.36
- Factors: UK growth slowdown; tariffs add uncertainty.
AUD/USD: Aussie Weakens on Global Slowdown
AUD/USD around 0.66 hit by war's commodity volatility and China exposure. Dollar gains from CPI resilience.
- Expected range late March: 0.65-0.67
- Factors: RBA pause; oil spikes mixed for commodity currencies.
USD/CAD: Loonie Supported by Oil Surge
USD/CAD near 1.35 sees downside as war boosts Canadian oil exports. CPI keeps dollar firm but energy offsets.
- Expected range late March: 1.34-1.36
- Factors: BoC vs Fed divergence; war favors CAD temporarily.
Takeaway: Steady CPI cements USD strength late March—favor dollar longs vs euro/pound, hedge with yen/gold amid war risks. What's your top USD pair trade?
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