CPI data is expected to show US inflation persisted in December, still above the Federal Reserve’s target

The US Bureau of Labor Statistics (BLS) will publish the Consumer Price Index (CPI) report for December on Tuesday at 1:30 GMT. The report is expected to show that prices will remain largely stable in the last month of 2025. As always, it is a key reading on inflation and could lead to some short-term movements in the US Dollar (USD).

However, it is unlikely to change the bigger picture in favor of the Federal Reserve (Fed) at the moment. With policy makers still focused on the health of the domestic labor market, the data will probably need to provide a real surprise to provoke any rethinking of monetary policy.

What can you expect in the next CPI data report?

Inflation itself is not expected That raises a lot of surprises. The main CPI is expected to increase 2.7% year on year in December, unchanged for the previous month. If you remove the more volatile food and energy components, the picture remains much the same: core inflation is expected to increase slightly to 2.7% from 2.6%, still uncomfortably above the Fed’s target.

Sponsored

Sponsored

On a monthly basis, both the general CPI and the core are expected to come to 0.3%, reinforcing the idea of ​​inflation slowly decreasing instead of falling.

This also explains why A cut in December was not a guarantee. Minutes released Dec. 30 show a deeply divided committee, with several officials saying the decision was carefully balanced and that leaving Interest rates have not changed A very real alternative.

In reviewing the report, TD Securities analysts noted that

“Following the impact of the government shutdown, we now expect core CPI inflation to peak at 3% in Q2. We continue to believe that the gradual decline in inflation will be the story in the second half of 2026. We expect core CPI inflation to end the year at 2.6%.

How could the US CPI report affect the EUR/USD?

Investors are still considering a mixed bag of signals from the December Nonfarm Payrolls report, but that debate is starting to take a backseat. New threats to the Fed’s independence are emerging, and they risk being completely overwhelmed The importance of inflation data That was issued on Tuesday.

Since the Fed is still monitored by the labor market, the December CPI numbers are unlikely to significantly change the political picture, unless inflation is a real surprise, in any direction.

Turning to EUR/USD, Pablo Piovano, Senior Analyst at FXStreet, shared his technical outlook.

“If EUR/USD falls decisively below the short-term 55-day MA at 1.1639, that opens the door to a deeper pullback, with the 200-day MA at 1.1561 emerging sooner rather than later,” he said. “Beneath this, attention will move to the November low of 1.1468 (November 5), followed by the August low of 1.1391 (August 1).” “On the other hand, a complete break above the December peak at 1.1807 (December 24) would bring the tone back to the upside. This would put the 2025 high at 1.1918 (September 17) on the radar, with the psychologically important 1.2000 level just outside of it,” added Piovano.