July CPI data aligns with Fed easing expectations, USD steady

The US Dollar has remained relatively stable following July CPI data that came in line with expectations, supporting the view for continued Federal Reserve easing. Core PCE inflation is projected to increase by 0.23% based on the CPI figures, keeping annual inflation modestly above the Fed's 2% target. Market participants await tomorrow's PPI data for additional confirmation of the inflation trajectory. The measured inflation print hasn't significantly altered market expectations for Fed policy, with a September rate cut still priced at 65% probability. EUR/USD trades near 1.0950, showing limited reaction to the data, while USD/JPY holds steady at 149.50. The lack of surprise in the inflation numbers has maintained the current market narrative of gradual Fed easing. Traders are now focusing on upcoming employment data and Fed communications for clearer directional cues on dollar pairs.