US CPI preview: dollar mixed, oil climbs to $95.91

Traders are awaiting the September CPI release for the next market catalyst.

EURUSD, USDJPY and GBPUSD are examined from a technical standpoint, defining the bias, risk levels, and targets ahead of the 8:30 AM ET inflation report. The contained currency ranges offer room for the data to shift prices.

The US dollar is mixed ahead of the release. Treasury yields are slightly lower, while US stock futures point to gains for the Dow and S&P 500 but a loss for the Nasdaq 100. Crude oil climbs toward $96, keeping energy costs at the center of the inflation conversation.

US CPI: The key question is whether core inflation remains contained.

The September CPI report will be released at 8:30 AM ET. Market expectations are:

• Headline CPI month over month: +0.6% compared to +0.4% last month.

• Headline CPI year over year: +3.6% compared to +3.4% last month.

• Core CPI month over month: +0.2% compared to +0.3% last month.

• Core CPI year over year: +2.5% compared to +2.4% last month.

Higher energy prices are expected to lift the headline figure. The more important question is whether these costs are spreading into other goods and services. This places the focus on the core reading, which strips out food and energy.

Last month, gasoline prices climbed 3.9%, accounting for over a third of the monthly headline increase. Core prices also rose 0.3%, with gains in airline fares, lodging, and used vehicles.

A 0.2% monthly core reading would show moderation from August, even if the annual rate rises to 2.5%. The readings can move in different directions as the annual calculation also depends on the inflation number dropping out from a year ago.

The core reading is the main focus for the release:

• Core at 0.3% or higher: Could push Treasury yields and the dollar higher as traders reassess the risk of further Fed tightening.

• Core at 0.2%: Could give the Fed more room to wait, especially if the firmer headline reading is concentrated in energy.

• Core at 0.1% or lower: Would show the right direction and could pressure yields and the dollar while giving stocks some relief.

Thursday's PPI report at 8:30 AM ET will offer another piece of the inflation puzzle. Together, the CPI and PPI data will help economists refine their estimates for PCE and core PCE inflation.

The US dollar is mixed across the board.

The dollar's largest decline is against the Australian dollar. Its largest gain is against the Japanese yen, though moves outside the AUD remain modest.

• EUR: USD up by approximately 0.02%.

• JPY: USD up by approximately 0.09%.

• GBP: USD down by approximately 0.08%.

• CHF: USD up by approximately 0.07%.

• CAD: USD down by approximately 0.01%.

• AUD: USD down by approximately 0.39%.

• NZD: USD down by approximately 0.07%.

AUDUSD trades near 0.7007 after hitting 0.7013. The Australian dollar's advance stands out in an otherwise restrained currency market.

Currency ranges still have room to move.

ATR(22) is the average true range over the last 22 trading days, roughly one month of trading. Comparing the current high-to-low range with that measure provides context for how much the pair has moved ahead of the North American session.

Using the latest high and low readings from the past 22 trading days, a low percentage of ATR suggests the potential for further movement.

EURUSD and USDJPY have completed about 38% and 37% of their ATRs. GBPUSD is at 44%. All three major pairs have significant room to extend if the CPI data comes as a surprise.

AUDUSD has already covered the largest share of its typical range at 75%, consistent with its stronger move this morning.

The ATR is context, not a ceiling or a promise of further movement. A strong data surprise can push a pair beyond its average range. If the price holds near an extreme, it can signal a trending market.

US stock futures at 8:00 AM ET show a split.

• Dow industrial average: +141 points.

• S&P 500: +15 points.

• Nasdaq 100: −59 points.

The split leaves the broader market looking firmer while technology shares lag ahead of the CPI release.

US Treasury yields are slightly lower.

• 2-year: 4.7784%, down 1.46 basis points.

• 5-year: 4.9905%, down 1.65 basis points.

• 10-year: 5.2022%, down 1.48 basis points.

• 30-year: 5.5513%, down 1.17 basis points.

The CPI report will test that move. A hotter core reading could reverse the decline, while softer underlying inflation could give bond buyers another reason to push yields lower.

Rising oil. Falling gold and silver.

Crude oil trades at $95.91, up $1.77 or 1.88%.

Unresolved negotiations over reopening the Strait of Hormuz and doubts surrounding a Russia-Ukraine ceasefire are among the supply risks forming the backdrop for elevated oil prices.

For the CPI report, the distinction matters: higher energy prices can lift headline inflation directly, while the core reading shows whether broader price pressures are becoming more persistent.

Other markets:

• Gold: $4,138.74, down $22.40 or 0.54%.

• Silver: $58.43, down $0.75 or 1.27%.

• Copper: $6.7445, up 0.28%.

• Bitcoin: $83,360, up $267 or 0.32%.

China: Factory inflation outpaces consumer inflation.

China's September CPI was up 0.9% y/y, below the 1.0% forecast and rising from 0.8% previously. Producer prices rose 5.0%, exceeding the 4.5% forecast and up from 3.8%. Core consumer inflation held at 1.0%.

That leaves a familiar question for traders: how much of the increase in production costs can be passed on to consumers?

European equities are mostly higher, with Italy the exception:

• Germany's DAX: +0.50%.

• France's CAC 40: +0.66%.

• UK's FTSE 100: +0.28%.

• Spain's IBEX 35: +0.24%.

• Italy's FTSE MIB: −0.64%.

For EURUSD, USDJPY and GBPUSD, the break and follow-through are key.

• EURUSD: Support at the session low of 1.1188; resistance at 1.1211.

• USDJPY: Support at 158.12; resistance at 158.51.

• GBPUSD: Support at 1.3245; resistance at 1.3275.

A dollar-positive reaction would put the EURUSD and GBPUSD lows, and the USDJPY high, in focus. A dollar-negative reaction would turn attention to the EURUSD and GBPUSD highs, and the USDJPY low.

The data will provide the push. Price action and the technical tools applied to it will tell whether buyers or sellers can keep control.

Nearby swing areas and the 100- and 200-hour moving averages are key. A break that holds carries more weight than the first spike. If the price breaks an extreme and quickly returns inside the range, the move lacked follow-through.