|

How to trade the Euro-zone CPI Inflation with EUR/USD

  • September's flash inflation report is watched closely by the ECB and moves the Euro.
  • The Market Impact Tool shows trading opportunities in both upside and downside surprises on this event.
  • the EURUSD moved, on average, 9 pips in the 15 minutes after the data release and 33 pips in the following 4 hours.

Buying EUR/USD Scenario

  • Tradable Positive Trigger: +1.41 deviation (2.15%) [BUY Pair]
    Key Resistance Level: 1.1750

This time, if it comes out at higher than expected with a relative deviation of 1.41 or higher(2.15 or higher in actual terms), the pair may go up reaching a range of 13  pips in the first 15 minutes and 64 pips in the following 4 hours.

1.1720 was a separator of ranges in late September. 1.1750 served as a quadruple top in July and remains relevant as resistance. 1.1815 was the peak in recent days and the highest level since July. 1.1850 is next up.

Selling EUR/USD Scenario

  • Tradable Negative Trigger: -2.04 deviation (2.01%) [SELL Pair]
  • Fundamental Support Level: 1.1650

If it comes out lower than expected at a relative deviation of -2.04 or less(2.01 or lower in actual terms), the EURUSD may go down reaching a range of 19 pips in the first 15 minutes and 61 pips in the following 4 hours.

1.1690 was a pivotal line in mid-September. It is followed by the strong support level of 1.1650. Next, down the line, we see 1.1605 which supported the pair in mid-September. 1.1565 was the low point last week.

EUR/USD Levels on the Chart

EUR USD Technical Analysis September 28 2018

More data

Inflation is expected to increase this time, rising above the 2% target that the European Central Bank eyes. The initial release of CPI data tends to have a more significant impact than the following ones.

In the last five releases, the EURUSD moved, on average, 9 pips in the 15 minutes after the data release and 33 pips in the following 4 hours. The previous release had no surprise. 

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

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.

More from Yohay Elam
Share:

Editor's Picks

EUR/USD meets initial support around 1.1800

EUR/USD remains on the back foot, although it has managed to reverse the initial strong pullback toward the 1.1800 region and regain some balance, hovering around the 1.1850 zone as the NA session draws to a close on Tuesday. Moving forward, market participants will now shift their attention to the release of the FOMC Minutes and US hard data on Wednesday.
 

GBP/USD bounces off lows, retargets 1.3550

After bottoming out just below the 1.3500 yardstick, GBP/USD now gathers some fresh bids and advances to the 1.3530-1.3540 band in the latter part of Tuesday’s session. Cable’s recovery comes as the Greenback surrenders part of its advance, although it keeps the bullish bias well in place for the day.

Gold remains offered below $5,000

Gold stays on the defensive on Tuesday, receding to the sub-$5,000 region per troy ounce on the back of the persistent move higher in the Greenback. The precious metal’s decline is also underpinned by the modest uptick in US Treasury yields across the spectrum.

RBNZ set to pause interest-rate easing cycle as new Governor Breman faces firm inflation

The Reserve Bank of New Zealand remains on track to maintain the Official Cash Rate at 2.25% after concluding its first monetary policy meeting of this year on Wednesday.

UK jobs market weakens, bolstering rate cut hopes

In the UK, the latest jobs report made for difficult reading. Nonetheless, this represents yet another reminder for the Bank of England that they need to act swiftly given the collapse in inflation expected over the coming months. 

Ripple slides to $1.45 as downside risks surge

Ripple edges lower at the time of writing on Tuesday, from the daily open of $1.48, as headwinds persist across the crypto market. A short-term support is emerging at $1.45, but a buildup of bearish positions could further weaken the derivatives market and prolong the correction.