How to trade the US Inflation data with EUR/USD

• The US Inflation report and the Core CPI are critical especially one day ahead of 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 EURUSD moved, on average, 34 pips in the 15 minutes after the data release and 54 pips in the following 4 hours. 

Selling EUR/USD Scenario

• Tradable Negative Trigger: +1.58 deviation (2.32%) [BUY Pair]

• Key Support Level: 1.1720

This time, if it comes out at higher than expected with a relative deviation of 1.58 or higher (2.32% or higher in actual terms), the pair may go down reaching a range of 26 pips in the first 15 minutes and 78 pips in the following 4 hours. 

1.1767 served as support on the way down and also worked as such in recent days. 1.1720 was a swing low on May 21st. Further down, 1.1650 was the low point on May 25th.

Buying EUR/USD Scenario

• Tradable Positive Trigger: -1.34 deviation (2.10%) [BUY Pair]

• Key Resistance Level: 1.2000

If it comes out lower than expected at a relative deviation of -1.34 or less (2.1% or lower in actual terms), the EURUSD may go up reaching a range of 22 pips in the first 15 minutes and 65 pips in the following 4 hours.

1.1830 capped the pair in recent days and also served as support beforehand. 1.1915 was the low point in early January and remains relevant. The round number of 1.2000 looms above. 

EUR/USD Levels on the Chart

 

More data

 

Inflation is always a top-tier indicator and it becomes even more important as the Fed is set to make its decision. There is no doubt that the Fed raises rates but the path ahead is quite uncertain. An increase in core inflation can tilt the Fed to the hawkish side while a weaker figure may move it to the dovish end. 

See the full preview: A small change in CPI can trigger a big move for USD and the Fed

In the last five releases, the EURUSD moved, on average, 34 pips in the 15 minutes after the data release and 54 pips in the following 4 hours. The previous release had a negative surprise of -1.34 in terms of relative deviation and the EURUSD reached a 45 pip range in the first 15 minutes and a range of 60 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.