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How to trade the Euro-zone inflation with EUR/USD

  • Maintaining price stability is the single mandate of the ECB and thus has a significant impact on the Euro.
  • The Market Impact Tool shows trading opportunities in both upside and downside surprises on this event.
  • The EUR/USD moved, on average, 12 pips in the 15 minutes after the data release and 42 pips in the following 4 hours.

Buying EUR/USD Scenario

  • Tradable Positive Trigger: +2.5 deviation (1.72%) [BUY Pair]
    Key Resistance Level: 1.1725

This time, if it comes out at higher than expected with a relative deviation of +2.5 or higher (1.72% or higher in actual terms), the pair may go up reaching a range of 15 pips in the first 15 minutes and 66 pips in the following 4 hours. 

1.1676 was the peak on May 30th. 1.1725 was the high point on May 25th. Further above, 1.1822 was the swing low on May 9th.

Selling EUR/USD Scenario

  • Tradable Negative Trigger: -2.5 deviation (1.47%) [SELL Pair]
  • Fundamental Support Level: 1.1600

If it comes out lower than expected at a relative deviation of -2.5 or less (1.47% or lower in actual terms), the EUR/USD may go down reaching a range of 18 pips in the first 15 minutes and 63 pips in the following 4 hours.

 1.1600 is a round number that was a battle line in late May. 1.1550 was the November low and remains significant. 1.1510 is the fresh 2018 and the 10-month low.

EUR/USD Levels on the Chart

EUR USD Technical analysis chart May 31 2018

More data

In the last five releases, the EUR/USD moved, on average, 12 pips in the 15 minutes after the data release and 42 pips in the following 4 hours.

The previous release had no surprise regarding relative deviation, but nevertheless, the [pair] reached a 31 pip range in the first 15 minutes and a range of 77 pips 4 hours after that.

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.

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