EUR/USD Bull-Flag Unfolds Ahead of U.S. CPI Report

U.S. Consumer Price Index (CPI) to Climb to Annualized 1.8%- First Uptick Since February.

Core Rate of Inflation to Hold Steady during 1.7% per Annum.

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Trading a News: U.S. Consumer Price Index (CPI)

U.S. CPI

An uptick in a U.S. Consumer Price Index (CPI) might stoke a near-term pullback in EUR/USD as signs of rising acceleration puts vigour on a Federal Open Market Committee (FOMC) to serve normalize financial process in 2017.

Why Is This Event Important:

Even yet Fed Fund Futures mostly cost a 50% luck for a pierce in December, Chair Janet Yellen and Co. might stay on march to broach 3 rate-hikes in 2017 as executive bank officials design to grasp a 2% aim for acceleration over a process horizon. In turn, a FOMC might validate a some-more assertive proceed during a subsequent seductiveness rate preference on Sep 20 generally as a FOMC ‘expects to start implementing a change piece normalization module comparatively soon.’

However, another gloomy growth might hint a bearish greeting in a greenback as it encourages a Fed to safety a stream process via a remainder. As a result, a U.S. dollar might continue to vaunt a bearish function over a entrance months if they pivotal information prints entrance out of a genuine economy drag on interest-rate expectations.

Impact that the U.S. CPI report has had on EUR/USD during a prior print

June 2017 U.S. Consumer Price Index (CPI)

EUR/USD 5-Minute Chart

EUR/USD Chart

DailyFX 3Q Forecasts Are Now Available

The U.S. Consumer Price Index (CPI) slowed to an annualized 1.6% from 1.9% in May, while a core rate of acceleration hold solid during 1.7% for a second uninterrupted month. A deeper demeanour during a news showed a debility was led by a 1.6% decrease in appetite prices, with travel costs squeezing 0.7% in June, while prices for food beverages hold prosaic during a same period. The greenback mislaid belligerent following a weaker-than-expected CPI report, with EUR/USD climbing above a 1.1450 segment to finish a day during 1.1465.

How To Trade This Event Risk(Video)

Bullish USD Trade: Headline and Core Inflation Picks Up in July

  • Need a red, five-minute candle following a imitation to cruise a brief EUR/USD trade.
  • If a marketplace greeting favors a bullish dollar position, sell EUR/USD with dual apart lots.
  • Set stop during a near-by pitch high/reasonable stretch from entry; demeanour for during slightest 1:1 risk-to-reward.
  • Move stop to breakeven on remaining position once initial aim is met, set reasonable limit.

Bearish USD Trade: CPI Report Falls Short of Market Forecasts

  • Need a green, five-minute EUR/USD candle to cruise a brief dollar trade.
  • Implement a same proceed as a bullish dollar position, only in a conflicting direction.

Potential Price Targets For The Release

EUR/USD Daily Chart

EUR/USD Daily Chart

Chart – Created Using Trading View

  • The unsuccessful try to fill in the opening from January-2015 (1.2000 down to 1.1955) might beget a near-term pullback in EUR/USD generally as a Relative Strength Index (RSI) comes off of overbought territory, though a broader opinion stays constructive as both cost a movement indicator safety a bullish formations from progressing this year.
  • Lack of movement to pull next a 1.1670 (50% retracement) jump might hint a pierce behind towards a monthly-high (1.1910) as a bull-flag arrangement unfolds.
  • Interim Resistance: 1.1960 (38.2% retracement) to 1.2042 (July 2012-low)
  • Interim Support: 1.0980 (78.6% retracement) to 1.1000 (38.2% expansion)

EUR/USD Retail Sentiment

EUR/USD Retail Sentiment

Track Retail Sentiment with a New Gauge Developed by DailyFX Based on Trader Positioning

Retail merchant information shows 28.2% of traders are net-long EUR/USD with a ratio of traders brief to prolonged during 2.55 to 1. In fact, traders have remained net-short given April 18 when EUR/USD traded nearby 1.06524; cost has changed 10.5% aloft given then. The series of traders net-long is 5.0% aloft than yesterday and 5.0% reduce from final week, while a series of traders net-short is 0.8% reduce than yesterday and 6.0% reduce from final week.

— Written by David Song, Currency Analyst

To hit David, e-mail dsong@dailyfx.com. Follow me on Twitter during @DavidJSong.

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