Trump’s tariff plans are likely to continue drawing market attention next week. Owing to the fear and uncertainty over what Trump may do next, traders could overlook two key releases next week – the US CPI and FOMC minutes. However, stay sharp and keep focused as FOMC minutes and CPI could still prove influential amidst market uncertainty.  

CPI & FOMC: The Market Drivers in Focus  

The Federal Open Market Committee (FOMC) is one of the biggest mover of global markets. The Fed is charged with making decisions on interest rates and US monetary policy, hence, the minutes from their meeting often provide insights into their view of how the largest economy in the world is performing and how they may react. 

In the March meeting, the Fed kept in line with expectations by keeping rates unchanged and forecasting two rate cuts this year. However, they did add that “uncertainty around the economic outlook has increased”. One potential source of that uncertainty? Tariffs. If the Fed has reason to believe that tariffs will create inflationary pressures, they may pivot to slow down the pace of rate cuts and even keep rates elevated for longer. 

One key indicators on the Fed’s mind will be CPI (Consumer Price Index) – a marker of inflationary pressure in the US. The last print in February hinted at cooling price pressures, where CPI rose just 0.2% month-over-month (MoM), bringing year-over-year (YoY) inflation to 2.8%, slightly below expectations. However, just when everyone thought inflation was on a leash, Trump-era tariffs came back into the picture.higher than expected, the Fed may face a balancing act between managing inflation risks and supporting economic growth. 

EURUSD: Can prices sustain gains?  

Germany’s recent increase in defence spending has bolstered expectations for the region’s recovery and freed up €500bn for German infrastructure, factors that have contributed to the recent gains in EURUSD. If the U.S. March CPI surprises to the upside, the Fed may be forced to rethink its easing plans, risking market volatility and renewed USD strength, which could temper the upward momentum of EURUSD. However, if US CPI remains soft, may keep the door open for rate cuts, introducing an outlook for EURUSD that is more mixed in comparison. 

Ticker: EURUSD, Timeframe: Daily 

Bullish momentum has returned for the EURUSD from the start of the year, as the price holds above the Ichimoku Cloud and ascending trendline. The price is now retracing and looking to retest the 1.0750 support in line with the 161.8% Fibonacci extension. If current momentum persists, it may prompt a further move to resistances at 1.1050 and 1.1200, in line with the previous highs. However, a deeper retracement and bearish breakout of the trendline could potentially see the price retest the 1.0500 support level in line with the 161.8% Fibonacci Retracement. 

USDCNH – Keep an eye out for PBoC’s movements 

Amid broader market developments last week, one key move may have flown under the radar as the People’s Bank of China (PBoC) seems to be loosening its grip on the Chinese yuan. In other words, it is letting the currency move a bit more freely than usual.  

As USDCNH 1-month volatility remains relatively low, it signals that traders may not have been watching the pair as its movements have been minimal. USDCNH remains one to watch, as  further yuan weakness could push beyond 7.37, near levels where the PBoC has intervened before. 

A strong-than-expected US CPI print could raise expectations that the Fed will hold rates higher for longer. That might give the USDCNH an initial upward support, but if recession concerns resurface, it could drag on broader risk sentiment, potentially leaving the price in a choppy range unless the PBoC steps in with weaker fixings. Meanwhile, a softer US CPI print could provide a relief for recessionary concerns and take some pressure off the USD, thereby influencing the momentum in USDCNH.  

Ticker: USDCNH, Timeframe: Daily, Source: 

From a technical perspective, USDCNH has broken above the descending trendline and now holds above the Ichimoku Cloud. Further bullish momentum may lead to a price test of the 7.3650 resistance in line with 61.8% Fibonacci Extension and the 7.4100 resistance, which aligns with the 50% and 100% Fibonacci Extensions. However, any shift in sentiment or bearish pivot could result in see price retest supports at 7.2800 and 7.2250. 

Watch out for CPI and FOMC minutes and the potential for higher volatility in the market once the Fed’s stance is revealed and depending on how the market interprets so. Keep in mind that movements may be muddied by headlines over Trump-era tariffs, so traders should remain cautious, stay nimble and ready to adapt to potential price movements.