U.S. Dollar Price Action Setups into CPI Week: Trump tariffs, USD/CAD, EUR/USD, USD/JPY

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Trump is back and so is FX volatility. The tariff topic continues to dominate headlines and after assurance that announcements on reciprocal tariffs is coming next week, there could be more for USD bulls to chew on.

Also next week, however, is the US CPI print on Wednesday and this has been a large point of emphasis of late. with USD/JPY breaking down into the 150-151.95 zone, there could be an equity item of note, as well, as greater signs of carry unwind could lead to vulnerability in equities, such as we saw last summer. Notably the sell-off in USD/JPY in July of last year started after a below-expected CPI print, as did the reversals in November of 2022 and November of 2023. And, even on the other side, the bullish breakout in April of 2024 took place after an above-expected CPI print, so that data point has been key for USD/JPY and USD/JPY could be key for several macro markets, such as U.S. large cap equities.

Ideally, CPI prints in a goldilocks range that doesn’t eliminate the idea of FOMC cuts this year nor triggering a greater fear of carry unwind.

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