The last couple of weeks have been anything but quiet for US markets.
First, escalating tensions in the Middle East rattled investors from a geopolitical perspective. Then on Friday we had a major shock from the US labour market, with Non-Farm Payrolls missing expectations by a wide margin.
It’s not the start to the month the Fed would have been hoping for.
This week begins with markets still digesting the geopolitical risks, but attention will quickly shift back to the data — and in particular inflation. What makes this week interesting is that we get both CPI and the Core PCE Price Index, which is relatively unusual. If both sets of numbers point in the same direction, the market could start to aggressively reprice expectations for the Fed’s next move on rates.
And that’s where the problem lies for Fed members.
Talk of stagflation has crept back into the conversation. A weakening labour market combined with stubbornly high inflation would leave the Fed stuck between the classic “rock and hard place” scenario — slowing growth on one side, persistent inflation on the other.
From a trading perspective, some markets are difficult to navigate right now. Energy in particular is highly sensitive to geopolitical headlines and can move sharply without warning.
FX markets, however, continue to respect technical levels reasonably well — even if the price action is a little whippy. That creates opportunity around major data releases.
One pair that stands out this week is EURUSD.
The euro remains one of the most liquid currency pairs in the world and it’s currently sitting near some very interesting technical levels. Over the past few sessions, EURUSD has found support just above 1.1500, a level that also held towards the end of 2025.
If Wednesday’s CPI comes in stronger than expected, above +0.3% m/m or +2.5% y/y, that support could come under real pressure. A break lower would open the door for further downside, particularly given the current broader dollar strength tied to geopolitical uncertainty.
On the other hand, a softer inflation print could offer some relief to Fed officials — and the euro — with initial resistance now sitting around 1.1670.
Key Levels to Watch
- Resistance 2: 1.1752 – Trendline resistance
- Resistance 1: 1.1673 – 200-day moving average
- Support 1: 1.1468 – November 2025 low
- Support 2: 1.1389 – August 2025 low
With major US inflation data on deck, EURUSD could provide one of the cleaner trading opportunities of the week.
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