Us February Cpi In Focus
Danske also forecasts core CPI at +0.2% m/m (seasonally adjusted) and 2.5% y/y. The view is based on a low housing contribution. The report says the forecasts are marginally above consensus. It also states this is not expected to materially change current market pricing for the US dollar or interest rates. Attention is also on planned remarks from ECB Executive Board member Isabel Schnabel. The ECB silent period ahead of the March meeting begins tomorrow, and both Luis de Guindos and Schnabel are scheduled to speak today. We see the EUR/USD is holding steady below 1.0800, a marked difference from the 1.1650 level we were observing this time last year. The main driver continues to be inflation, with the most recent US CPI data for February 2026 coming in at 2.8%, just above market forecasts. This release will likely reinforce the current strength of the US dollar.Policy Divergence And Trading Implications
This persistent inflation supports the view that the Federal Reserve will maintain its hawkish stance, especially when contrasted with the European Central Bank which held rates steady last week. This policy divergence should continue to favour the dollar. We see one-month implied volatility for EUR/USD has consequently risen to 9.2%, suggesting traders are pricing in more uncertainty. Much like how we watched energy prices during the conflict in Iran back in 2025, we are now focused on ongoing global supply chain reports. Comments from ECB officials will be closely watched for any deviation from their current dovish tone before they enter their silent period. Any change in their language could create short-term trading opportunities. The yield difference between 2-year US Treasuries and German Bunds has now widened to 160 basis points, making long-dollar positions more attractive. Derivative traders should consider strategies that benefit from a stable or stronger dollar, such as selling out-of-the-money call options on the Euro. This approach takes advantage of both the interest rate differential and elevated volatility. Create your live VT Markets account and start trading now.
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