US unemployment ticked slightly higher to 4.2% from 4.1%, with wage growth remaining unchanged at 0.3% month-on-month (MM) and easing to 3.8% from 4.0% year-on-year (YY).
Tariffs; Inflation; Fed Minutes; Consumer Sentiment
In addition to markets closely monitoring US tariff developments this week, particularly responses from trading partners, the macro spotlight will be on US inflation numbers, minutes from the last Fed meeting and consumer sentiment data.
March’s US CPI Inflation data (Consumer Price Index) will be a key risk event to watch on Thursday this week, particularly with risks of higher inflation amid tariffs and the possibility of further policy easing this year.
Signs of elevated price pressures could see investors pare back rate cut bets, which may weigh on US Treasury yields and the USD, while lower-than-expected inflation could prompt the opposite outcome and underpin yields and the USD. Economists estimate YY CPI inflation eased in March, cooling to 2.6% (from 2.8% in February) at the headline level and 3.0% (from 3.1%) based on the core measure. Headline MM CPI inflation is also expected to slow to 0.1% (from 0.2%), while core CPI inflation is anticipated to have ticked higher to 0.3% (from 0.2%).
The Fed meeting minutes on Wednesday will also be watched closely this week and may provide more indication into inflation expectations and whether forecasts of four rate cuts this year are realistic. You will recall that the Fed kept the target rate on hold in March at 4.25% – 4.50% and highlighted an ‘increase’ in economic uncertainty and a reduction in the pace of Quantitative Tightening (QT).
Through the Fed’s Summary of Economic Projections, members noted that they still expect two rate cuts this year, though it is important to note that more members lent towards leaving the Fed funds rate on hold this year. Real GDP (Gross Domestic Product) forecasts were also revised lower this year, as well as in 2026 and 2027, with PCE inflation (Personal Consumption Expenditures) revised upward for 2025 and 2026 and is expected to reach the Fed’s inflation target of 2.0% by 2027.
Friday’s consumer sentiment survey data for April from the University of Michigan will be an interesting print to monitor, given sentiment is already in the doldrums. However, although the sample set for this release is small – 500 telephone interviews compared to 3,000 in the US Conference Board survey – the interview dates for this week’s preliminary release are between 25 March and 7 April, meaning the tail end of this date range includes Trump’s tariffs. As such, it could help provide some insight into how much tariffs have impacted sentiment. Unsurprisingly, the current median forecast suggests a drop to 54.9 (from March’s 57.0), with an estimate range between 56.5 and 52.7.
Technicals on the Radar This Week
US Dollar Index
Those who follow my technical reports regularly may recall that I have been watching the USD for some time now. To save me repeating myself, in last week’s preview, I noted the following (italics):
Regarding the USD’s technical position, the USD Index continues to exhibit scope to explore lower levels on the monthly chart until the 50-month simple moving average (SMA) at 101.73. This follows a rejection of resistance at 109.33 at the start of this year. Meanwhile, price action on the daily timeframe ended last week testing resistance-turned-support at 103.94. Given what I see on the monthly scale, USD bulls are unlikely to print anything meaningful from 103.94, especially with the 200-day SMA circling above at 104.92. As a result, I expect sellers to eventually change gear and breach 103.94, opening the door for a bearish scenario towards support at 101.92 – located just north of the noted 50-month SMA.
As you can see, price touched gloves with daily support at 101.92 and the 50-month SMA at 101.97 and pencilled in a reasonable recovery at the tail end of the week. Looking ahead, aside from the possibility of traders playing the range between resistance at 103.94 and support coming in at 101.92 on the daily chart, areas outside of this base that I believe deserve a place on the watchlist are resistance between 105.77 and 104.86 (this consists of a decision point zone, a horizontal resistance, as well as the 50- and 200-day SMAs), and a support level from 100.54.
