With this week’s CPI report now behind markets, attention has shifted squarely to the Producer Price Index, the next data point that could shape how the Federal Reserve balances a cooling labor market against inflation that’s proven stickier than hoped.
The setup heading into the release is fairly clean: a weaker-than-expected PPI print would likely reinforce bets on a longer pause from the Fed, adding pressure on a dollar that’s already been trying to claw back ground after last week’s sharp selloff. A hotter reading, on the other hand, would revive talk of a more hawkish September and could give the dollar’s recent recovery attempt further fuel.
Technically, the US Dollar Index is sitting right at a meaningful juncture, trading near the 100 level while attempting to push back above a rising trendline and a horizontal support zone around 99.42 that has acted as a repeated floor in recent sessions. How the index reacts to today’s PPI data could determine whether that zone continues to hold as support or whether the dollar’s post-CPI recovery attempt stalls out.
Elsewhere, EUR/USD has slipped back toward the low 1.1500s as the broader dollar recovery weighs on the pair, giving back some of its recent gains. Whether that pullback extends or reverses is likely to hinge on the same PPI outcome driving the dollar’s own next move.
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