How to trade the US Inflation Report with EUR/USD

The US Inflation report and the Core CPI are critical for the Fed and have a considerable impact on the US Dollar.
The Market Impact Tool shows trading opportunities in both upside and downside surprises on this event.
The EUR/USD moved, on average, 37 pips in the 15 minutes after the data release and 63 pips in the next 4 hours.

Yohay Elam FXStreet

Buying EUR/USD Scenario

Tradable Positive Trigger: -2.04 deviation (2.00) [BUY Pair]
Key Resistance Level: $1.1915

If it comes out lower than expected at a relative deviation of -2.04 or less (2.00% or lower in absolute terms), the EUR/USD may go up reaching a range of 16 pips in the first 15 minutes and 27 pips in the following 4 hours.

$1.1915 was the low point in early January and switched roles to resistance. The round $1.2000 is an important psychological level. $1.2055 was the April 27th low.

Selling EUR/USD Scenario

Tradable Negative Trigger: +2.04 deviation (2.40) [BUY Pair]
Key Support Level: $1.1822

If it comes out at higher than expected with a relative deviation of +2.04 or higher (2.40% or higher in absolute terms), the pair may go down reaching a range of 25 pips in the first 15 minutes and 81 pips in the following 4 hours.

The May 9th low of $1.1822 is the first line to watch. It is followed by $1.1715 which was a low point in late 2017. The last level to examine is $1.1600.

EUR/USD Levels on the Chart

EUR/USD Technical analysis chart May 10 2018

More data

The US Consumer Price Index report is an early indication of inflation which is one of the Fed's two mandates alongside employment. The inflation report for March saw a bump up in Core CPI to 2.1% YoY after 1.8% beforehand. Rising inflation indicates a faster pace of rate hikes while lower inflation means fewer ones. The figure for April will show if the increase seen in March is a one-off or the start of a broader trend.

See: US CPI Preview: fresh clues for the Fed

In the last five releases, the EUR/USD moved, on average, 37 pips in the 15 minutes after the data release and 63 pips in the next 4 hours.

The previous release had no surprise in terms of deviation and the EUR/USD reached a 13 pip range in the first 15 minutes and a range of 29 pips 4 hours thereafter.

Follow the publication of the figure on the economic calendar. Watch out for the data from the Market Impact tool, projecting the potential price changes according to the deviation. Here is the Market Impact Studies Users Guide.

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

EUR/USD climbs to daily highs on US CPI

EUR/USD now accelerates it rebound and flirts with the 1.1880 zone on Friday, or daily highs, all in response to renewed selling pressure on the US Dollar. In the meantime, US inflation figures showed the headline CPI rose less than expected in January, removing some tailwinds from the Greenback’s momentum.

GBP/USD clings to gains above 1.3600

GBP/USD reverses three consecutive daily pullbacks on Friday, hovering around the low-1.3600s on the back of the vacillating performance of the Greenback in the wake of the release of US CPI prints in January. Earlier in the day, the BoE’s Pill suggested that UK inflation could settle around 2.5%, above the bank’s goal.

Gold: Upside remains capped by $5,000

Gold is reclaiming part of the ground lost on Wednesday’s marked retracement, as bargain-hunters seem to have stepped in. The precious metal’s upside, however, appears limited amid the slightly better tone in the US Dollar after US inflation data saw the CPI rise less than estimated at the beginning of the year.