US CPI data set to show inflation heated up in June
- The US Consumer Price Index is set to rise 2.7% YoY in June, accelerating from May’s 2.4% growth.
- US President Donald Trump continues to threaten tariffs and undermine the Fed’s independence.
- June’s inflation data will significantly impact the direction of the US Dollar as it is a key indicator for the Fed’s interest-rate path ahead.
The United States (US) Bureau of Labor Statistics (BLS) will publish the all-important Consumer Price Index (CPI) data for June on Tuesday at 12:30 GMT.
Markets will look for fresh signs of US President Donald Trump's tariffs feeding through into prices. Therefore, the US Dollar (USD) could experience volatility on the CPI release as the data has a significant influence on the Federal Reserve’s (Fed) interest rate outlook for this year.
What to expect in the next CPI data report?
As measured by the change in the CPI, inflation in the US is expected to rise at an annual rate of 2.7% in June, having recorded a 2.4% increase in May. The core CPI inflation, which excludes the volatile food and energy categories, is forecast to rise 3% year-over-year (YoY), compared to the 2.8% acceleration reported in the previous month. Overall, inflation is expected to tick up further away from the Fed’s 2% target
Over the month, both the CPI and the core CPI are seen advancing by 0.3% in the same period.
Previewing the report, analysts at TD Securities said: “June core CPI likely rebounded to 0.27% month-over-month (MoM) following last month's surprising decline to 0.13%. We look for goods prices to gather steam in June, reflecting some tariff passthrough, and rebounding from last month's modest contraction.”
“Unlike May, we don't expect the services segment to help offset that strength. Headline also likely increased 0.27%, aided by energy prices,” they added.
How could the US Consumer Price Index report affect EUR/USD?
Heading into the US inflation showdown on Tuesday, markets digest a slew of fresh tariff threats by President Trump so far this month.
Over the weekend, Trump threatened a 30% tariff on imports from the European Union (EU) and Mexico, starting on August 1, having sent tariff letters to about 20 other countries last week.
Meanwhile, Trump is piling up political pressure for more aggressive stimulus from the US central bank, undermining its independence. The President continued to bash Fed Chair Jerome Powell by saying on Sunday that “it would be a great thing if Powell stepped down.”
White House economic adviser Kevin Hassett over the weekend warned Trump might have grounds to fire Powell because of renovation cost overruns at the Fed's Washington headquarters.
Against this backdrop, markets continue pricing in just over 50 basis points (bps) of interest rate reductions this year, with Powell sticking to his patient outlook on cuts.
The odds of a September Fed rate cut currently stand at about 60%, according to the CME Group’s FedWatch Tool, down from 65% seen at the start of the month.
The increased expectations of an extended pause by the Fed are mainly due to the latest tariff salvo from Trump and a resilient US labor market.
The June US employment data showed that the headline Nonfarm Payrolls (NFP) rose by 147,000, against expectations of a 110,000 job gain. Meanwhile, the Unemployment Rate ticked lower to 4.1% last month versus 4.2% in May.
Therefore, the inflation report for June is critical to gauging the market pricing of the Fed’s rate outlook, in turn, impacting the USD’s valuation in the near term.
An upside surprise in the monthly core CPI reading, which is not distorted by base effects, could provide additional leg to the USD recovery and weigh on EUR/USD. In such a case, the data could revive expectations of only one Fed rate cut this year.
However, a softer-than-expected monthly core inflation could ease concerns over the tariff effect on inflation, undermining the USD demand. In this scenario, EUR/USD could regain bullish traction.
Dhwani Mehta, Asian Session Lead Analyst at FXStreet, offers a brief technical outlook for EUR/USD and explains:
“The pair battles the 21-day Simple Moving Average (SMA) support at 1.1665. Meanwhile, the 14-day Relative Strength Index (RSI) indicator holds well above 50, despite the recent downtrend, suggesting that the bullish potential remains intact.”
“On the upside, the immediate resistance level is aligned at the 1.1750 psychological mark, above which the 1.1800 round level will be tested. Further north, the multi-year high of 1.1830 will come into play. Alternatively, a sustained move below the 21-day SMA could challenge the first support at the June 12 high of 1.1631. The next healthy support levels are seen at around 1.1550 and the 50-day SMA at 1.1474.”
Economic Indicator
Consumer Price Index (MoM)
Inflationary or deflationary tendencies are measured by periodically summing the prices of a basket of representative goods and services and presenting the data as The Consumer Price Index (CPI). CPI data is compiled on a monthly basis and released by the US Department of Labor Statistics. The MoM figure compares the prices of goods in the reference month to the previous month.The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally, a high reading is seen as bullish for the US Dollar (USD), while a low reading is seen as bearish.
Read more.Next release: Tue Jul 15, 2025 12:30
Frequency: Monthly
Consensus: 0.3%
Previous: 0.1%
Source: US Bureau of Labor Statistics
The US Federal Reserve (Fed) has a dual mandate of maintaining price stability and maximum employment. According to such mandate, inflation should be at around 2% YoY and has become the weakest pillar of the central bank’s directive ever since the world suffered a pandemic, which extends to these days. Price pressures keep rising amid supply-chain issues and bottlenecks, with the Consumer Price Index (CPI) hanging at multi-decade highs. The Fed has already taken measures to tame inflation and is expected to maintain an aggressive stance in the foreseeable future.
Inflation FAQs
Inflation measures the rise in the price of a representative basket of goods and services. Headline inflation is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core inflation excludes more volatile elements such as food and fuel which can fluctuate because of geopolitical and seasonal factors. Core inflation is the figure economists focus on and is the level targeted by central banks, which are mandated to keep inflation at a manageable level, usually around 2%.
The Consumer Price Index (CPI) measures the change in prices of a basket of goods and services over a period of time. It is usually expressed as a percentage change on a month-on-month (MoM) and year-on-year (YoY) basis. Core CPI is the figure targeted by central banks as it excludes volatile food and fuel inputs. When Core CPI rises above 2% it usually results in higher interest rates and vice versa when it falls below 2%. Since higher interest rates are positive for a currency, higher inflation usually results in a stronger currency. The opposite is true when inflation falls.
Although it may seem counter-intuitive, high inflation in a country pushes up the value of its currency and vice versa for lower inflation. This is because the central bank will normally raise interest rates to combat the higher inflation, which attract more global capital inflows from investors looking for a lucrative place to park their money.
Formerly, Gold was the asset investors turned to in times of high inflation because it preserved its value, and whilst investors will often still buy Gold for its safe-haven properties in times of extreme market turmoil, this is not the case most of the time. This is because when inflation is high, central banks will put up interest rates to combat it. Higher interest rates are negative for Gold because they increase the opportunity-cost of holding Gold vis-a-vis an interest-bearing asset or placing the money in a cash deposit account. On the flipside, lower inflation tends to be positive for Gold as it brings interest rates down, making the bright metal a more viable investment alternative.
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