The U.S. Bureau of Labor Statistics (BLS) releases the December Consumer Price Index (CPI) report on Tuesday at 13:30 GMT. It is expected that prices remained largely stable over the past month of 2025. As always, the report provides a key insight into inflation and may trigger short-term movements in the U.S. dollar (USD).
Yet, it is unlikely to change the bigger picture for the Federal Reserve (The Fed) for now. Policymakers are still primarily focused on the health of the domestic labor market. It would truly be a major surprise in the data before The Fed adjusts its monetary policy.
What to expect from the next CPI report
No major surprises are expected regarding inflation. The overall CPI is expected to rise by 2.7% year-on-year in December, the same as last month. If we exclude the volatile food and energy prices, the picture remains largely unchanged: core inflation is expected to rise slightly to 2.7% from 2.6%, still above The Fed's target.
On a monthly basis, both the overall CPI and core CPI are expected to come in at a fairly stable 0.3%. This shows that inflation is slowly declining, but not yet falling significantly.
This also explains why the December rate cut was never a given. The minutes from December 30 show the Committee was deeply divided, with several members indicating that keeping rates unchanged was a serious alternative.
Looking ahead to the report, analysts at TD Securities wrote:
"After the impact of the government shutdown, we now expect the core segment to peak at 3% in the second quarter. We believe slow disinflation will remain the story in the second half of 2026. We expect core CPI inflation to end the year at 2.6%."
How can the US Consumer Price Index report affect EUR/USD
Investors are still processing a mix of signals from the December Nonfarm Payrolls (NFP), but this discussion is becoming less important. New concerns have emerged about the independence of The Fed, which may cause the importance of Tuesday's inflation figures to fade into the background.
Since The Fed is closely monitoring the labor market, the December CPI figures are unlikely to change policy unless there is a real surprise regarding inflation.
For EUR/USD, Pablo Piovano, Senior Analyst at FXStreet, shared his technical outlook.
"If EUR/USD falls clearly below the 55-day moving average at 1.1639, room will open for a deeper retracement, making the 200-day moving average at 1.1561 quickly important," he says. "Below that, attention shifts to the November low at 1.1468 (5 November), followed by the August low at 1.1391 (1 August)." "On the other hand, if the December high at 1.1807 (24 December) is convincingly broken, the trend could resume upward. Then the 2025 high at 1.1918 (17 September) comes into view, with the psychologically significant level of 1.2000 just beyond," adds Piovano.