cpi meaning in forex

CPI means "Consumer Price Index" and it is a measure of how much the price of goods have changed over a specific period (usually one month). If the price of goods rise, then inflation will be said to have increased & vice versa.

Many forex traders anticipate the release of the cpi report of major countries like the USA because high inflation weakens a currency, so the traders will sell the currency if the cpi report indicates weakness.

Lets say the United States releases their CPI report for last month and it shows prices of goods rose significantly, then a currency pair like EUR/USD will see its exchange rate start rising causing you to require more us dollars to buy one euro. This means the us dollar has weakened.

When the United States government releases their CPI report it can cause the dollar to fall or rise, and you see the effect on the charts. If the CPI numbers come out better than the experts had forecasted, you will see the dollar gain strength and vice versa.