• AUD/USD
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  • EUR/GBP
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  • EUR/JPY
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  • EUR/USD
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    CHG
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  • GBP/USD
    SELL
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    CHG
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  • USD/CAD
    SELL
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  • USD/CHF
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  • USD/JPY
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S&P 500 crashes, USD surges after sticky CPI inflation rate

March's CPI data, above expectations, triggered a swift market response—S&P 500 plummeted, while the USD soared to a 30-year high against the yen. This inflation reading also causes concern over future Fed rate cut timings.
Source: Bloomberg
Picture of Frank Kaberna
Frank Kaberna
Director of Strategy, Chicago

Data current as of 4/10/2024

Key points

  • CPI inflation rate 0.1% higher than expected: (0:52)
  • S&P 500 crashed more than 1% post-CPI: (2:14)
  • Interest rates rise, Fed cuts delayed: (3:58)
  • US dollar hits 30-year high vs the yen: (6:09)
  • EUR/USD breaks below 1.0750: (7:29)

CPI inflation rate 0.1% higher than expected

In newly released March data, both core and headline Consumer Price Index (CPI) inflation rates came in at 3.8% and 3.5% respectively, slightly exceeding forecasts by 0.1%. This unexpected uptick in inflation could suggest mounting price pressures in the economy, influencing traders to reassess market conditions and potential central bank responses. The US continues to print robust economic data as the effects of 5.5% interest rates are yet to be seen.

S&P 500 crashed more than 1% post-CPI

Following the release of the CPI data, major stock indices experienced sharp declines, with the S&P 500 dropping approximately $100, the Nasdaq $300, and the Dow Jones $500. This market reaction reflects investors' concerns over higher inflation and its implications for interest rates and economic growth, impacting investment strategies across the board.

Interest rates rise, Fed cuts delayed

The 10-Year Treasury yields reached 4.5%, marking an uptick in line with a reduced likelihood of an FOMC interest rate cut in June from 60% to 20%. With an unlikely cut in June, doubt for the expected 3 rate cuts in 2024 grows. Rising yields signal shrinking investor appetite for bonds amid expectations of continued inflationary pressure, altering the landscape for forex and bond traders alike.

US dollar hits 30-year high vs the yen

USD/JPY soared as well, now edging close to 153.00 after surpassing the 152.00 mark for the first time since 1990. This remarkable price action underscores the US dollar's enduring strength and the wide interest rate differential between the US and Japan.

EUR/USD breaks below 1.0750

The euro, pound, and Australian dollar experienced notable dips against the US dollar, all falling more than 100 pips. This shift highlights the USD's strength in the forex market, influenced by global inflation trends and central bank policies, and guides traders in adjusting their forex trading strategies in anticipation of further currency movements.

How to trade US dollar

  1. Open an account to get started, or practice on a demo account
  2. Choose your forex trading platform
  3. Open, monitor, and close positions on USD pairs

Trading forex requires an account with a forex provider like tastyfx. Many traders also watch major forex pairs like EUR/USD and USD/JPY for potential opportunities based on economic events such as inflation releases or interest rate decisions. Economic events can produce more volatility for forex pairs, which can mean greater potential profits and losses as risks can increase at these times.

You can help develop your forex trading strategies using resources like tastyfx’s YouTube channel. Once your strategy is developed, you can follow the above steps to opening an account and getting started trading forex.

Your profit or loss is calculated according to your full position size. Leverage will magnify both your profits and losses. It’s important to manage your risks carefully as losses can exceed your deposit. Ensure you understand the risks and benefits associated with trading leveraged products before you start trading with them. Trade using money you’re comfortable losing.

Reviewed by:
Glen Frybarger
Senior Content Strategist, Chicago

This information has been prepared by tastyfx, a trading name of tastyfx LLC. This material does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. You should not treat any opinion expressed in this material as a specific inducement to make any investment or follow any strategy, but only as an expression of opinion. This material does not consider your investment objectives, financial situation or needs and is not intended as recommendations appropriate for you. No representation or warranty is given as to the accuracy or completeness of the above information. tastyfx accepts no responsibility for any use that may be made of these comments and for any consequences that result. See our Summary Conflicts Policy, available on our website.