Today's market landscape saw the EUR/USD pair maintaining a subdued stance around the 1.0850 mark, as investors held their breath ahead of the eagerly awaited release of the US CPI. The BLS dropped the bombshell, reporting a March CPI surge of 0.4% MoM and YoY acceleration of headline reading to 3.5%, both outstripping forecasts. These figures ring alarm bells for the market, signaling stubbornly high inflation levels.

Looking at the technical analysis, the bullish surge following the CPI release sets its sights on a critical resistance level of 105 on the Dollar index. A breakthrough at this level could trigger further buying activity, fueled by the anticipation of prolonged US inflationary pressures. Consequently, market players might recalibrate their expectations for Federal Reserve rate cuts, pushing them further into the future. This scenario paints a clear bullish picture for the USD, signaling decreased risk appetite among investors:

The hotter-than-expected inflationary data is a harsh reality check for those anticipating a swift interest rate cut by the Fed in June. With inflation continuing to defy the Fed's 2.0% target, hopes for a rate adjustment dwindled further. The prospect of interest rates remaining steadfast at the current 5.5% level sent shockwaves across financial markets, igniting a surge in the US Dollar's value against major currencies.

Attention now shifts to the impending release of the FOMC meeting minutes. However, the impact of these minutes might be muted following recent remarks from Fed Chair Jerome Powell, hinting at a reluctance to rush into rate adjustments. Powell underscored the Fed's stance, emphasizing the importance of inflation hovering above the target and the economy's resilience to elevated rates.

Meanwhile, the spotlight turns to the ECB, scheduled to announce its monetary policy decision. Market consensus points towards a status quo on interest rates, with speculation rife about potential cuts in June. Although some ECB members advocate for an April rate cut, citing reasons like the lack of updated wage data, the majority view April as premature for such a move.

Despite the ECB's decision today, all eyes remain fixated on the accompanying statement, which could sway sentiment towards the likelihood of a June rate cut. The prevailing interest rate differentials between the US and the Eurozone tilt the scales in favor of the US Dollar, as higher US rates allure foreign capital inflows.

Federal funds futures hint at a 54% probability of a Fed rate cut in June. Therefore, the market's reaction to inflation data could serve as a litmus test, either affirming or negating the anticipated policy pivot in June and consequently amplifying USD volatility.

In the realm of GBP/USD, the pair faced a significant downturn in the aftermath of the US CPI release. From a technical standpoint, a narrative akin to that of EUR/USD emerges within the pair: the decline drove prices towards a crucial medium-term demand line. Should there be a bearish breakout at this juncture, it is likely to attract heightened interest from sellers, potentially sparking a downward momentum that could see the pair delving into new lows: