US CPI data poised to ease in October as markets rethink expectations for a Fed rate hike

• A 0.3% MoM increase is forecast for the US Consumer Price Index in October.
• Core CPI inflation is forecast to ease to 0.2% on a monthly basis, down from September’s 0.3%.
• Alongside geopolitical developments and equity market movements, the inflation figures could shape the US Dollar’s near-term valuation.

October’s Consumer Price Index (CPI) figures are due on Tuesday from the US Bureau of Labor Statistics (BLS). As investors reconsider the Federal Reserve’s (Fed) interest-rate outlook, the release could affect the valuation of the US Dollar (USD). 

For most CPI series, the release will omit 12-month percentage changes. October 2025 monthly data are unavailable because collection did not take place during the government shutdown, which ran from 1 October 2025 to 12 November 2025. 

Explaining the omission in a press release, the BLS stated: “For most CPI series, BLS could not publish October 2025 indexes. As a result, BLS will not publish 12-month percent changes for October 2026 for indexes where October 2025 data are not available,”

Forecasts point to a 0.3% monthly increase in headline CPI, slowing from September’s 0.6% rise. Core CPI, meanwhile, is expected to advance 0.2%, against 0.3% in the preceding month.

A marked easing in the forthcoming US inflation figures is expected by economists at Deutsche Bank. Their forecast is for “headline CPI [is] to rise by 0.20% month-on-month, down from 0.65% previously, with core CPI also up 0.20% after 0.33% last time.” Even with those softer readings anticipated, the bank’s economists “continue[s] to expect 25bp rate increases at the December and March FOMC meetings, absent a further material tightening in financial conditions.”   

US Consumer Price Index Report Could Shape EUR/USD’s Next Move

An additional 25 basis points (bps) increase in the Federal Reserve’s (Fed) policy rate at its final meeting of the year currently carries a probability of about 80% in market pricing, according to the CME FedWatch Tool. 

October’s employment report underscored the resilience of the labour market: Nonfarm Payrolls (NFP) increased by 165K, while the Unemployment Rate fell to 4.1% even as the Labor Force Participation Rate edged higher. At the press conference following the Fed’s October decision to hold interest rates in the 3.75%-4.00% range, Fed Chair Kevin Warsh characterised labour market conditions as “positive,” adding that policymakers’ discussions centred primarily on the price stability mandate.

Last week’s sharp decline in crude oil prices came as markets became more hopeful of a diplomatic solution to the Middle East conflict following the Republicans’ midterm election defeat. The latest price drop will not appear in October’s inflation data. Nevertheless, a sizeable downside surprise in monthly CPI, with a reading of 0.1% or lower, alongside further falls in energy prices could prompt market participants to stop pricing in a December rate rise. Such an outcome could trigger abrupt selling of the US Dollar (USD), allowing EUR/USD to build bullish momentum in the near term.

By contrast, inflation matching or exceeding market expectations, together with stalled ceasefire talks with Iran, could strengthen the case for an interest rate increase next month. Market positioning nevertheless suggests that the USD might have only limited scope to advance in these circumstances, leaving any bearish response in EUR/USD short-lived.

Equity market movements could also shape the USD’s valuation and EUR/USD’s performance. Should the sell-off in technology shares continue, it could underpin the USD and restrain EUR/USD gains, even if softer inflation figures strengthen the case for a cautious pace of Fed policy tightening.

The persistence of recent US Dollar strength depends heavily on risk sentiment, according to ING strategists, who observe that “we think the dollar rally requires the risk-off mood to persist this week.” In their view, “Friday’s move looked a bit too stretched relative to short-term market drivers,” creating “some moderate correction risk” should market anxiety subside. Nevertheless, ING still regards the wider environment as supportive of the Dollar, citing the “macro story”

Setting out their forecast, they add: “We expect tomorrow’s October US CPI to come in at 0.3% month-on-month for both headline (consensus 0.3%) and core (0.3%),” and say that this result “should help cement expectations for a December Fed hike (19bp priced in), making the swap curve more protected from other equity market shocks.”

A concise technical assessment of EUR/USD comes from Eren Sengezer, European Session Lead Analyst:

“The EUR/USD pair has been moving in a relatively narrow channel since the beginning of October. During last week’s post-midterm elections rally, the Relative Strength Index (RSI) indicator on the daily chart recovered toward 50 but failed to clear this level, highlighting buyers’ hesitancy.”

“On the upside, 1.1260 (upper arm of the Bollinger Bands, static level) aligns as the first resistance level ahead of 1.1335 (50-day Simple Moving Average (SMA), static level) and 1.1410 (100-day SMA). Looking south, the first support level could be spotted at 1.1130 (lower arm of the Bollinger Bands, static level). If this support fails and gets confirmed as resistance, technical sellers could take action and open the door for an extended drop toward 1.1000 (static level, round level).”