Lackluster U.S. CPI, Retail Sales to Keep EUR/USD Afloat

U.S. Consumer Price Index (CPI) to Slow for Second Consecutive Month, Core Rate to Hold Steady.

Retail Sales to Rebound 0.6% After Contracting for Last Two Months.

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

U.S. Consumer Price Index

A miscarry in U.S. Retail Sales accompanied by a signs of gummy acceleration might boost a seductiveness of a greenback, though another array of muted information prints might column adult a EUR/USD sell rate as it drag on interest-rate expectations.

Why Is This Event Important:

With Fed Fund Futures now prominence a larger than 80% luck for a Jun rate-hike, bets for aloft borrowing-costs might keep a dollar afloat via a residue of a month, and a executive bank might betray a some-more minute exit plan in a second-half of 2017 as officials uncover a larger eagerness to unpack a change sheet. However, indications of a negligence liberation might pull a Federal Open Market Committee (FOMC) to buy some-more time, and Chair Janet Yellen and Co. might continue to plan a depot rate tighten to 3.00% as ‘market-based measures of acceleration remuneration sojourn low; survey-based measures of longer-term acceleration expectations are small changed, on balance.

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

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

EUR/USD 5-Minute

EUR/USD Chart

The U.S. Consumer Price Index (CPI) narrowed to an annualized 2.4% from 2.7% in February, with a core rate of acceleration highlighting a identical function as a reading slipped to 2.0% from 2.2% during a same period. A apart news showed Retail Sales narrowed another 0.2% in March, with a debility led by a 1.2% decrease in direct for engine car parts, while discretionary spending for wardrobe bounced behind 1.0% after descending 2.7% in February. The greenback struggled to reason a belligerent followed a collection of gloomy data, with EUR/USD climbing to a event high of 1.0630, though a marketplace greeting was ephemeral as a span finished a day during 1.0602.

How To Trade This Event Risk(Video)

Bearish USD Trade: Retail Sales, CPI Continue to Disappoint

  • Need a green, five-minute candle following a collection of information prints to cruise a prolonged EUR/USD trade.
  • If marketplace greeting favors a bearish dollar trade, buy EUR/USD with dual apart lots.
  • Set stop during a near-by pitch low/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.

Bullish USD Trade: Household Spending Picks Up, Core Inflation Holds Steady

  • Need a red, five-minute EUR/USD candle to preference a prolonged dollar trade.
  • Carry out a same setup as a bearish dollar setup, only in a conflicting direction.

Potential Price Targets For The Release

EUR/USD Daily

EUR/USD Daily Chart

Chart – Created Using Trading View

  • The near-term opinion for EUR/USD stays constructive as cost a Relative Strength Index (RSI) extend a bullish formations carried over from late-2016, though a span stands during risk of stuffing a opening following a initial turn of a French presidential choosing amid a miss of movement to mangle above a 1.1020 (50% expansion) hurdle.
  • In addition, a RSI appears to be on march to exam trendline support after a fibre of unsuccessful attempts to pull into overbought territory, with a pierce next a 200-Day SMA (1.0832 opening adult a initial downside segment of seductiveness around 1.0780 (100% expansion) to 1.0790 (38.2% expansion) followed by 1.0660 (50% expansion) to 1.0680 (78.6% expansion).
  • Interim Resistance: 1.1140 (23.6% expansion) to 1.1160 (38.2% expansion)
  • Interim Support: 1.0470 (38.2% expansion) to 1.0500 (50% expansion)

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IG Sentiment

Retail merchant information shows 37.6% of traders are net-long EUR/USD with a ratio of traders brief to prolonged during 1.66 to 1. In fact, traders have remained net-short given April 18 when EUR/USD traded nearby 1.06042; cost has changed 2.5% aloft given then. The series of traders net-long is 11.1% reduce than yesterday and 31.2% aloft from final week, while a series of traders net-short is 0.4% aloft than yesterday and 8.9% reduce from final week.For More Information on Retail Sentiment, Check Out a New Gauge Developed by DailyFX Based on Trader Positioning.

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— Written by David Song, Currency Analyst

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