The U.S. Bureau of Labor Statistics (BLS) will release the December consumer price index (CPI) data today at 13:30 GMT. The report is expected to show that prices remained largely stable in the last month of 2025. As always, this is a significant inflation-related release that could trigger short-term movements in the U.S. dollar (USD) exchange rate.
Nevertheless, it won't change the broader picture for the Federal Reserve (Fed) yet. Decision-makers are still primarily focused on the domestic labor market conditions. Data would have to be truly surprising to prompt the Fed to alter its monetary policy.
What to expect in the next CPI data report?
Analysts do not expect inflation to bring any major surprises. It is estimated that the main CPI will rise by 2.7% year-on-year in December, unchanged from the previous month. After excluding the more volatile categories of food and energy, the picture looks similar. Core inflation is expected to rise slightly to 2.7% from 2.6%, still significantly above the Fed's target.
On a monthly basis, both the headline and core CPI are expected to remain stable at 0.3%. This confirms that inflation is declining gradually, not abruptly.
This also explains why the rate cut in December was not predetermined. The minutes from December 30 show a divided committee, with several officials stating the decision was very close, and leaving rates unchanged was a real alternative.
TD Securities analysts comment on the report:
"After the government shutdown, we expect the core inflation to peak at 3% in the second quarter. We still believe gradual declines in inflation will dominate in the second half of 2026. We expect core CPI inflation to end the year at 2.6%.
How can the U.S. inflation report affect EUR/USD?
Investors are still analyzing mixed signals from the December nonfarm payrolls (NFP) data, but this debate is losing significance. New threats to the Fed's independence are emerging, which could completely overshadow the importance of Tuesday's CPI data.
The Fed continues to closely monitor the labor market, so December CPI readings are unlikely to alter the decision-making landscape, unless inflation surprises on either side.
Pablo Piovano, senior FXStreet analyst, presents his technical analysis for EUR/USD:
"If EUR/USD clearly breaks above the short-term 55-day moving average at 1.1639, it will open the door to a deeper correction. The 200-day moving average at 1.1561 will quickly come into focus. Below that level, we will turn our attention to the November low at 1.1468 (November 5), followed by the August lows at 1.1391 (August 1). On the other hand, a clear breakout above the December high at 1.1807 (December 24) would shift the sentiment to bullish. This would bring the current year's peak at 1.1918 (September 17) into focus, just below the psychologically significant level of 1.2000.
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