Core versus headline CPI: which one does the first candle follow?

[FXS London Scalper]

When US CPI comes out, the screen shows headline and core month-on-month and year-on-year figures at the same time. The first candle often reacts to whichever number surprises most, but the move that holds through the session tends to follow core month-on-month, because that is what rate expectations are built on.

A hypothetical: headline +0.1 versus 0.3 expected because of energy, core +0.4 versus 0.3. An algorithm scanning headlines may sell the dollar for a few seconds, then the market reprices around the core figure. Traders who chase the first spike can get caught in the reversal.

A method to check this yourself is to collect the last two years of releases, mark which component surprised and in which direction, and note where EURUSD was 30 minutes later versus one minute later. That small table tells you more than general opinions.

It also helps to watch shelter and services ex-housing separately, as these sub-components have often driven the narrative. Which line do you watch first on release day?