USD Outlook: Focus Turns to Upcoming CPI Data Amid Tariff Tensions

USD Outlook: Focus Turns to Upcoming CPI Data Amid Tariff Tensions

Published: July 11, 2025
Category: Forex | USD | Economic Data

US Dollar Remains Sensitive to Macroeconomic Data

The US Dollar (USD) continues to react primarily to economic indicators, particularly inflation-related data. Next week’s Consumer Price Index (CPI) release is expected to play a pivotal role in determining the short-term direction of the greenback.

While global market volatility remains elevated, especially due to increasing tariff rhetoric, the immediate impact of trade headlines on the USD has been subdued—as traders await more definitive inflation signals.

Trump's Tariff Threats Stir Trade Tensions

Overnight, US President Donald Trump announced a new round of tariffs, including a 35% levy on Canadian goods starting August 1. In addition, he proposed blanket tariffs of 15–20% on most US trading partners, up from the current baseline of 10%.

In a letter to Canadian Prime Minister Mark Carney, Trump cited “unsustainable trade deficits” caused by Canada’s tariff and non-tariff barriers. These announcements, while politically significant, have had limited direct impact on USD performance so far.

What to Watch Next:

• US June CPI data (next week): Key for Fed rate outlook
• Tariff response from Canada and EU
• Risk sentiment and equity market flows

Key Takeaways:

• USD continues to react more to macroeconomic data than tariffs
• Traders await CPI figures for inflation clarity
• Tariff escalation adds background pressure, but not immediate FX impact
• USD direction hinges on Fed expectations and inflation trends

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