Today’s Market Outlook
11 September 2026
Will U.S. CPI Clarify the Dollar’s Direction?
Oil Pullback Supports the Yen as USD/JPY Trades Near ¥154
Market Summary
Today’s main event is the release of the August U.S. Consumer Price Index at 13:30 London time.
Yesterday’s stronger-than-expected U.S. PPI pushed the implied probability of a 0.25% rate hike at the September FOMC to around 70%. If tonight’s CPI also surprises to the upside, expectations of further U.S. tightening and dollar buying may strengthen further.
In the early London session, however, yen buying is modestly dominant as oil prices retreat.
NY crude futures have fallen back from the $104 range and are now trading in the upper $99 range, below $100. As concern over deteriorating Japanese terms of trade has eased somewhat, the yen is being bought back.
USD/JPY initially found support around ¥154.30, but has softened again toward ¥154.05–¥154.10, approaching the Tokyo afternoon low near ¥153.96.
U.S. CPI Expectations
Market expectations for August U.S. CPI are as follows.
・Headline CPI, year-on-year: +3.4%
・Previous: +3.4%
・Core CPI, year-on-year: +2.4%
・Previous: +2.5%
・Headline CPI, month-on-month: +0.4%
・Previous: +0.1%
・Core CPI, month-on-month: +0.2%
・Previous: +0.2%
Annual inflation is expected to remain steady or ease slightly, while the monthly headline measure is expected to show a faster pace of price increases.
For this reason, markets will focus not only on headline CPI but especially on core CPI, which excludes energy and food.
Even if headline CPI rises on higher oil prices, dollar buying may not be sustained if core CPI slows.
If CPI Surprises to the Upside
If both headline and core CPI exceed expectations, yesterday’s PPI upside surprise is likely to reinforce concern about renewed inflationary pressure.
The expected reaction would be:
U.S. CPI upside surprise
→ Higher expectations of a September rate hike
→ Rising U.S. Treasury yields
→ Dollar buying
→ Declines in EUR/USD and GBP/USD
→ USD/JPY strength
USD/JPY could break above the ¥154.30 area and rebound toward ¥155.
However, if higher yields trigger a sharp decline in U.S. equities, risk-averse yen buying may also intensify. In that case, the dollar may rise against the euro and sterling, while USD/JPY’s upside remains limited.
If CPI Surprises to the Downside
If both headline and core CPI fall short of expectations, rate-hike expectations are likely to recede.
The expected reaction would be:
U.S. CPI downside surprise
→ Reduced expectations of a September rate hike
→ Falling U.S. Treasury yields
→ Dollar selling
→ USD/JPY decline
→ EUR/USD and GBP/USD strength
USD/JPY could break below the Tokyo afternoon low of ¥153.96 and test the lower ¥153 range.
If yen carry-trade unwinding resumes, the previous lows in the ¥152 range may come back into focus.
If U.S. yields decline while oil remains below $100, dollar selling and yen buying could reinforce each other, increasing the risk of a larger USD/JPY decline.
If the Data Is Mixed
Current forecasts point to an acceleration in monthly headline CPI but a slowdown in annual core CPI.
This makes a mixed outcome quite possible.
For example, if headline CPI beats expectations while core CPI is in line or weaker, the initial dollar-buying reaction could reverse.
Conversely, even if headline CPI is weak, an upside surprise in core CPI could highlight persistent underlying inflation and support the dollar.
Markets may initially react to the headline figure before reassessing direction once the core data is examined.
Oil Prices and the Yen
NY crude futures briefly rose into the $104 range on concern over a prolonged Middle East conflict and Saudi production restraint.
Today, however, oil has fallen below $100 and is trading in the upper $99 range.
Japan is highly dependent on imported oil, so higher crude prices tend to weigh on its trade balance and terms of trade, creating a yen-negative factor. Conversely, falling oil prices can support the yen by easing Japan’s import burden.
A recovery in oil above $100 could ease yen buying. Further declines from the upper $99 range, however, may limit upside in USD/JPY and yen crosses.
USD/JPY
USD/JPY is trading near ¥154.
Key near-term levels are as follows.
Upside
・¥154.30 area: Early London rebound high
・¥155.00: Psychological level
・Around ¥155.30: Former important support zone
Downside
・¥153.96: Tokyo afternoon low
・¥153.00: Psychological level
・¥152 range: Recent low area
If strong CPI data pushes USD/JPY above ¥154.30, short covering toward ¥155 may develop.
Conversely, if weak CPI data takes the pair below ¥153.96, yen carry-trade unwinding could resume and accelerate the decline.
Given the scale of the recent move lower, volatility is likely to expand in both directions immediately after the release.
Yen Crosses
EUR/JPY has extended its daily low to around ¥178.70.
GBP/JPY recovered to the ¥208.50 area before falling again toward the ¥208.10 range.
If oil-driven yen buying continues, yen crosses are likely to remain heavy.
Even if U.S. CPI is strong, risk aversion caused by falling equities could make declines in yen crosses more pronounced than in USD/JPY.
Conversely, if CPI is moderately weak and lower U.S. yields coincide with stronger equities, yen crosses may attract buying on dips.
The Euro and the ECB
Yesterday’s ECB meeting highlighted concern over inflation.
Today, an interview with ECB President Lagarde and comments from ECB Chief Economist Lane are scheduled.
A renewed emphasis on inflation risks from the ECB could support the euro. Conversely, if an upside CPI surprise raises expectations of a wider U.S.-euro area yield spread, EUR/USD is likely to fall.
For EUR/JPY, the ECB stance will matter, but so will developments in yen carry trades.
Other Key Events
・U.S. September University of Michigan Consumer Sentiment Index
・University of Michigan inflation expectations
・Turkey July current account balance
・Mexico July industrial production
・Germany July current account balance
・Comments from ECB President Lagarde
・Comments from ECB Chief Economist Lane
・Comments from SNB Chairman Schlegel
The University of Michigan Consumer Sentiment Index is expected to decline to 51.0 from 51.7 previously.
Following the CPI release, consumer inflation expectations may provide an additional catalyst for the dollar and U.S. yields.
Key Points Today
・Whether monthly headline CPI exceeds +0.4%
・Whether monthly core CPI exceeds +0.2%
・Whether the implied probability of a September U.S. rate hike rises further
・Whether USD/JPY breaks above the ¥154.30 area
・Whether ¥153.96 can hold
・Whether NY crude recovers above $100
・Whether U.S. equities can withstand rising yields
・Whether yen carry-trade unwinding resumes
Summary
Today’s U.S. CPI will be a key release for September FOMC rate-hike expectations and the direction of the dollar.
If CPI follows PPI in surprising to the upside, U.S. rate-hike expectations could strengthen further and favor dollar buying. USD/JPY may break above ¥154.30 and test a rebound toward ¥155.
Conversely, a weaker CPI print could combine dollar selling from reduced rate-hike expectations with yen buying driven by lower oil prices, potentially taking USD/JPY below ¥153.96 and extending its decline.
If headline and core inflation figures are mixed, the initial market reaction could reverse.
Rather than relying only on the move immediately after the release, markets should assess core CPI, U.S. Treasury yields, U.S. equities, and oil prices together to judge whether a sustained direction is emerging for the dollar.
