US CPI Holds at 3.4%: Why the Inflation Print Could Still Keep the Dollar Supported

US inflation delivered a mixed signal for currency markets in August. Headline CPI held steady at 3.4% year-over-year, matching expectations, while monthly CPI increased 0.4%. The more closely watched core CPI rose 0.3% month-over-month, above the 0.2% market forecast, although annual core inflation eased to 2.4% from 2.5%. The key FX takeaway is that the report was not soft enough to remove Federal Reserve tightening expectations. With core inflation coming in hotter than expected on a monthly basis, traders may continue to price a meaningful probability of a Fed rate hike at the upcoming September meeting. The US Dollar reacted positively after the release, with the Dollar Index trading around 99.25. This suggests that markets are focusing more on the underlying core inflation signal than the unchanged headline figure. EUR/USD remains particularly sensitive to the inflation-driven shift in Fed expectations. The pair is trading around the 1.1600–1.1650 area, while the 200-day SMA near 1.1635 represents an important technical pivot. A sustained move above 1.1635 could keep the bullish structure intact and expose 1.1700 and potentially 1.1800. On the downside, a break below the 1.1560–1.1520 support zone could increase selling pressure toward 1.1460. MarketMindFX View: Today's CPI report is best described as a dollar-supportive mixed print. Headline inflation matched expectations, but stronger monthly core inflation reduces the urgency for traders to abandon Fed tightening bets. The next major question is whether US yields can extend their rise and keep the Dollar Index above the 99 area. Key FX Levels: DXY: 99.00 psychological support / 99.25 immediate reaction zone EUR/USD resistance: 1.1635, 1.1700, 1.1800 EUR/USD support: 1.1560–1.1520, 1.1460, 1.1350 Oil prices remain an additional inflation risk. If energy prices stay elevated, markets could continue to reassess the path of US inflation and monetary policy, creating further volatility across major FX pairs. Source: FXStreet / US Bureau of Labor Statistics, September 11, 2026. MarketMindFX analysis.