The U.S. Consumer Price Index (CPI) report arrived broadly in line with market expectations for both headline and core readings, reinforcing investor confidence that the broader inflation trajectory continues to moderate. Shelter costs were responsible for approximately two-thirds of the monthly increase. Government shelter measures tend to lag real-time market rents by 12 to 18 months, a well-documented dynamic that indicates overall inflation would appear substantially more favorable once housing-related pressures begin to subside.

The market response has been modestly dovish. Implied probabilities for a September Federal Reserve rate hike have declined from roughly 46% to 42.1%, while Treasury yields have edged lower across the curve. The 2-year yield fell 4.2 basis points to 4.176%, and the 10-year yield dropped 2.8 basis points to 4.655%. U.S. equities are trading higher in futures, with the Dow Jones Industrial Average up 150 points, the S&P 500 up 29 points, and the Nasdaq 100 up 100 points. The pullback in yields weighs on the dollar's interest-rate advantage, which has been a key driver of the currency's strength throughout the Fed's tightening cycle. Market participants will now look to upcoming Fed communications and labor market data for further clarity on the policy path.

Technical Analysis of Major USD Pairs

EURUSD: The euro is trading higher against the dollar, though the session high of 1.1562 remains just below the 100-day moving average at 1.15665. A sustained break above that moving average would reinforce the bullish bias and bring the 50% retracement of the decline from the 2026 high at 1.1586 into focus as the next target.

USDJPY: The dollar-yen pair moved lower and tested its rising 100-hour moving average at 158.697, with the session low reaching 158.69 before a modest rebound to approximately 158.80. A sustained break below the 100-hour MA would redirect attention toward the nearly converged 200-hour MA at 158.20 and the 200-day MA at 158.126.

GBPUSD: Cable extended to a fresh session high at 1.3541, placing the July high of 1.35573 squarely in focus. A decisive break above that level would mark the pair's highest value since May 12 and open the path toward the April high at 1.3657.

USDCHF: The dollar-franc pair has retreated to test its 100-hour MA at 0.8103 and 200-hour MA at 0.80949. A break below those levels would shift the bias back to the downside following the more bullish price action observed over the prior two sessions. Since mid-June, the pair has traded predominantly within a range of 0.8029 to 0.81513, with occasional extensions on either side. The 100- and 200-hour moving averages sit near the middle of that range and continue to serve as key short-term reference points for both buyers and sellers.

USDCAD: The dollar-Loonie is dipping below its 100-day moving average at 1.39176, marking the first such move below that indicator since May 15. A sustained hold below the 100-day MA, followed by a break of the 50% retracement level at 1.3899, would strengthen the bearish bias and direct trader attention toward the 200-day moving average at 1.3853.