Slowing U.S. CPI to Keep EUR/USD Supported Above July-Low (1.1312)

U.S. Consumer Price Index (CPI) to Narrow for Fourth Consecutive Month in June.

Core Rate to Hold Steady during Annualized 1.7%- Slowest Pace of Growth Since 2015.

– Join DailyFX Market Analyst Nick Cawley LIVE to Cover a U. of Michigan Confidence Survey.

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

U.S. CPI

Another downtick in a U.S. Consumer Price Index (CPI) might coax a miscarry in EUR/USD as a Federal Open Market Committee (FOMC) appears to be scaling behind a hawkish opinion for financial policy.

Why Is This Event Important:

Even yet U.S. Retail Sales are projected to boost in June, a prepared remarks for a Humphrey-Hawkins testimony appears to have rattled interest-rate expectations as marketplace participants scale behind bets for a Dec rate-hike. Signs of resigned cost pressures might hint a bearish greeting in a greenback, and a Federal Open Market Committee (FOMC) might mostly validate a wait-and-see proceed during a subsequent rate preference on Jul 26 as Chair Yellen warns ‘inflation continues to run subsequent a 2 percent design and has declined recently.’

Nevertheless, a certain enlargement might pull a FOMC to exercise a some-more assertive proceed in normalizing financial process amid a flourishing contention to unpack a change sheet.

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

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

EUR/USD 5-Minute

EUR/USD Chart

DailyFX 3Q Forecasts Been Released and Are Available in Our Trading Guides

The U.S. Consumer Price Index (CPI) enervated for a third true month in May, with a title reading slipping to an annualized 1.9% from 2.2% in April. At a same time, a core reading suddenly narrowed to 1.7% per annum during a same duration to symbol a slowest gait of enlargement given May 2015, and signs of resigned cost pressures might inspire a Fed to buy some-more time as a executive bank struggles to grasp a 2% aim for inflation. The U.S. dollar mislaid belligerent following a gloomy CPI report, with EUR/USD clearing a 1.1250 zone, though a marketplace greeting as ephemeral as a span sealed a day during 1.1218.

How To Trade This Event Risk(Video)

Bearish USD Trade: U.S. CPI Report Drags on Interest-Rate Expectations

  • Need a green, five-minute candle following to a information prints to cruise a prolonged EUR/USD position.
  • If a 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: Price Growth Household Consumption Exceeds Market Forecast

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

Potential Price Targets For The Release

EUR/USD Daily

EUR/USD Daily Chart

Chart – Created Using Trading View

  • EUR/USD has pulled behind from a uninformed 2017-high (1.1490), though a near-term opinion stays constructive as prolonged as a span binds above a monthly-low (1.1312), that mostly lines adult with a former-resistance section around 1.1290 (38.2% expansion).
  • Will keep a tighten eye on a Relative Strength Index (RSI) as it pulls behind from overbought territory, though a change in marketplace function might continue to reveal in a second-half of 2017 as cost and a movement indicator safety a bullish trends from late final year.
  • Need a tighten above a 1.1480 (78.6% expansion) hurdle to open adult a subsequent topside segment of seductiveness around 1.1580 (100% expansion).
  • Interim Resistance: 1.1616 (2016-high) to 1.1670 (78.6% expansion)
  • Interim Support: 1.0980 (50% retracement) to 1.1020 (50% expansion)

IG Sentiment

Retail merchant information shows 29.6% of traders are net-long EUR/USD with a ratio of traders brief to prolonged during 2.38 to 1. In fact, traders have remained net-short given Apr 18 when EUR/USD traded nearby 1.06683; cost has changed 6.9% aloft given then. The series of traders net-long is 1.7% reduce than yesterday and 4.1% aloft from final week, while a series of traders net-short is 0.6% reduce than yesterday and 10.0% reduce from final week. For more information on retail sentiment, check out a new gauge developed by DailyFX based on trader positioning.

— Written by David Song, Currency Analyst

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

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