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U.S. markets showed a muted reaction to the latest CPI report, with equities slightly lower, Treasury yields rising modestly, and the USD gaining strength. The Dow, S&P 500, and NASDAQ futures pointed to a softer open, reversing earlier pre-market gains. Treasury 10-year yields edged up to 4.179%, remaining within a 4.00%-4.25% range as traders await stronger catalysts. The EUR/USD fell below its 100-hour moving average to 1.1588, while GBP/USD faced resistance at the 200-day moving average. USD/JPY approached the 158.89 level, nearing a key 2025 high. The CPI data, in line with expectations, showed headline and core inflation unchanged at 2.4% and 2.5% YoY, respectively, with minimal impact on market positioning. The lack of surprises in the CPI report has left markets in a wait-and-see mode, with limited directional bias. Traders are monitoring whether the Fed will maintain its current policy stance or signal tighter monetary conditions. The USD's strength reflects ongoing demand for safe-haven assets, while equities remain pressured by concerns over inflation persistence. For forex traders, key technical levels in EUR/USD and GBP/USD could determine near-term trends, with USD/JPY's break above 158.89 signaling potential for further gains. For Gulf investors, the stable CPI environment suggests continued U.S. dollar strength, which could impact regional portfolios with USD exposure. The focus will shift to upcoming economic data and Fed statements for clearer policy signals. Technical indicators in major currency pairs remain critical, with EUR/USD's support at 1.1542-1.1554 and GBP/USD's resistance at 1.34413 warranting close attention. Market participants should also watch for any divergence between inflation data and asset prices.
