FX Daily: Impact of US CPI mostly depends on equities in Daily Currencies Ratings 13/05/2026 USD: Another 0.9% MoM inflation jump US CPI data for April is released today, and we forecast a second consecutive 0.9% MoM headline print, taking YoY inflation to 4.0%. This would be above the 0.6% MoM / 3.7% YoY consensus, although we are in line with expectations of a 0.3% MoM / 2.7% YoY core CPI print. The rebound in the headline will be driven primarily by gasoline and diesel prices, while a recovery in medical care and recreation prices should account for the 0.3% MoM acceleration in core. That core figure is ultimately what matters most for the Fed. Still, it is probably too early to expect clear evidence of second‑round effects, and we suspect that a hotter‑than‑expected headline print could be sufficient to give the recent hawkish repricing in the USD swap curve some additional momentum. There is currently 7bp of Fed tightening in the curve by year-end. The positive implications for the dollar, however, may depend more on the equity channel than on rates. Global risk sentiment has remained a more dominant driver than short‑term rate differentials and oil prices for several USD crosses, including EUR/USD. Good days for the greenback have generally coincided with bad days for equities of late. Let’s see whether fears of a rate hike can prompt fresh stock valuation concerns. That said, CPI is still likely to play second fiddle to any meaningful developments related to Iran. Recent days have underscored how far apart Iran and the US remain on key aspects of a nuclear deal. At the same time, markets have been reluctant to price a renewed escalation, despite Trump’s claim yesterday that the ceasefire is “on life support” and further reports of military activity in the Strait of Hormuz. The longer this stalemate persists, the greater the upside risks for the USD, both in the near term and over the medium run – the latter via a more prolonged drag on the global economy, to which the dollar is typically negatively correlated. Francesco Pesole EUR: ZEW to remain pessimistic EUR/USD has continued to hold up well alongside risk sentiment despite growing pessimism about a resolution in the Gulf. But any meaningful equity correction would likely prove incompatible with current levels, even if ECB pricing remains more hawkish than the Fed’s. Today’s eurozone calendar includes the ZEW surveys, which will give a first glimpse of sentiment in Germany in May. Consensus is looking at a further deterioration in both the expectations and current situation indices. These surveys can be hard to interpret in such a geopolitically volatile environment, but the message should be one of (predictable) worsening in the eurozone’s growth outlook. Our view of EUR/USD remains bearish-leaning unless we start to see tangible steps towards a US-Iran peace deal. A break above 1.180 hardly looks sustainable in this environment, and a retest of 1.170 looks more likely if anything. Francesco Pesole GBP: More political premium can build Pressure on UK Prime Minister Keir Starmer intensified further yesterday after the Home Secretary, Shabana Mahmood, joined more than 70 MPs in calling for his resignation. Betting markets are now pricing in a very high probability that Starmer will leave office this year, and investors are likely to interpret any forthcoming scheduled address by the Prime Minister as a potential resignation announcement. The pound started coming under pressure