The dollar is rising across markets in reaction to the US consumer-price release. The print came in stronger than expected — many components landed in the "green zone," reflecting acceleration in both headline and core CPI. That means inflation has returned to the forefront while US labor market problems have (for now) receded into the background. Moreover, the outcome of the October Federal Reserve meeting no longer looks predetermined: market participants are again talking about the prospect of a 25-basis-point rate hike. The probability of more aggressive tightening — 50 basis points by year-end — has also increased. In other words, a strong September CPI has overshadowed weak Nonfarm Payrolls and allowed the greenback to reenter the "big league."

The report's structure clearly supports not only hawkish but ultra-hawkish sentiment. Headline consumer prices accelerated to 3.7% year-on-year in September from 3.4% in August. The consensus was 3.6%. On a monthly basis, the index rose 0.6% after a 0.4% increase, matching the forecast but confirming stronger price pressure during the month. Core CPI was also in the "green zone": the annual rate rose from 2.4% to 2.6%, while most analysts expected 2.5%. The monthly gain held at 0.3%, despite forecasts for a slowdown to 0.2%.

Persistent core inflation in the US came as an unwelcome surprise for EUR/USD buyers.

Energy clearly played a significant role in September's acceleration. Gasoline jumped 9.1% month-on-month, accounting for more than half of the monthly rise in headline CPI. The energy component rose 5.2% from 2.1% in August. However, the entire September inflation spike cannot be attributed solely to the Middle East shock, because pressure intensified outside the energy sector as well.

Foremost among those non-energy drivers is housing, which accelerated to 0.4% month-on-month after 0.3% previously. Rent rose 0.2%, owners' equivalent rent 0.3%, and lodging away from home jumped 2.0%. Services excluding energy services rose 0.4% after August's 0.3% rise. Transportation services rose 0.6%, and medical care rose 0.3% (after a 0.2% decline in the prior month).

This suggests core inflation was supported by multiple sources.

The goods segment also sided with the hawks. Goods excluding food and energy rose 0.3% after a 0.1% increase in August. Supported used-car prices rose 0.7% and apparel 0.3%. At the same time, food overall did not rise, and grocery prices even edged down 0.1%. But these restraining factors were insufficient to offset the strengthened pressure in core categories.

Recent business surveys suggest the drivers of the upward dynamic go well beyond an oil shock. Manufacturers point to import tariffs, higher steel and aluminum costs, and shortages of certain electronic components. Service-sector firms cite higher fuel, labor, and tariff-related costs. Together with resilient demand, these factors create conditions for firms to pass higher input costs through to final prices. The CPI alone does not quantify each cause's contribution, but business signals are consistent with a broadening of price pressure.

In this context, it is also worth recalling the final GDP estimate for the United States in Q2. According to the final data, the US economy grew 2.2% year-on-year, up from the previously reported 1.5% YoY. Consumption and investment were revised up, and final sales to private domestic purchasers rose 4.6%.

Resilient demand lets the Fed refocus on inflation risks, especially since the September report showed accelerating headline and core CPI. Against this backdrop, weak Nonfarm Payrolls, in my view, no longer present a compelling argument for keeping the policy rate unchanged.

CME FedWatch data show hawkish expectations about the Fed's next moves have risen again today. The probability of an October rate hike increased from 22.1% to 47.7%. The chance of a cumulative 50-basis-point tightening by year-end rose from 18.7% to 32.2%. This refers to total tightening that could occur in two separate steps—in October and December.

Thus, September's CPI strengthened hawkish expectations and supported the dollar, but the greenback's path will largely depend on the producer-price report. If PPI also prints in the "green zone" (especially its core measures), the market — and the Fed — will receive another argument in favor of further monetary tightening. In that case, the dollar will gain additional support and EUR/USD sellers will get a fresh impulse to extend the downward movement.

In my view, the pair still has room to decline further, so corrective pullbacks are sensible opportunities to open short positions.

From a technical perspective, EUR/USD on the H4, D1, W1, and MN timeframes is either on the lower Bollinger Band line or between the middle and lower band lines. On the four-hour, daily, and weekly charts, price is below all Ichimoku lines, which formed a bearish "Parade of Lines" signal on H4 and D1. The nearest target of the downward move is at 1.1100 (the lower Bollinger Band on the daily chart). The primary target is at 1.1030 (the lower Bollinger Band on the monthly chart).