USD Strengthens on March CPI Surge as Hormuz Crisis Fuels Inflation

The US dollar is gaining broad-based strength following a hotter-than-expected March CPI report, driven primarily by surging energy costs linked to the ongoing Strait of Hormuz blockade. The energy-inflation feedback loop has forced the Federal Reserve and other major central banks to maintain hawkish stances, even as fragile geopolitical ceasefires offer little relief to supply chains. EUR/USD is under pressure as the dollar index firms, with traders repricing rate cut expectations further out on the Fed's timeline. The CPI surge has reinforced the narrative that monetary policy normalization will be delayed, supporting US Treasury yields and widening rate differentials in the dollar's favor. Commodity currencies face a tug-of-war between elevated resource prices and deteriorating risk appetite. GBP/USD and USD/JPY are also reacting, with the yen weakening as the Bank of Japan remains relatively dovish compared to the Fed's hawkish hold. Traders should watch for upcoming Fed commentary and further shipping data from the Hormuz corridor, as both could catalyze the next directional move across major pairs.