The EUR/USD pair faced rejection at 5-DMA and turned lower, now on the verge of breaching 1.1200 support. The German retail sales came in below expectations and weighed on the EUR over the last hour, while the European equities opened sharply lower as Deutsche bank-led risk-aversion extends into the European session today.
Next in focus remains the Eurozone flash CPI estimate for September, scheduled to be published at 09.00GMT later this session.
CPI to rise further in September
Eurostat will publish the euro zone's inflation first estimate for September. Consumer prices are expected to show a 0.4% rise on a yearly basis, following the 0.2% growth seen previously. While the core figures are also expected to tick higher 0.9% y/y in Sept versus 0.8% last. Rising price pressures in the 19-nation bloc may signal that the ECB monetary policy is having intended effects on the economy.
If the CPI comes weaker-than-expected it would reinforce more ECB easing speculations, which could send EUR/USD lower to test weekly lows at 1.1179. On the other hand, a much stronger CPI data could EUR/USD back beyond 1.1250 barrier.
Analysts at TDS explained, “We may see core inflation push a tenth higher during the month, but most of the upward momentum will come from a smaller drag from energy prices, where the year-ago drag should dissipate entirely by the beginning of 2017. Markets are also looking for a 0.4% reading.”
Deviation impact on EUR/USD
Readers can find FX Street's proprietary deviation impact map of the event below. As observed the reaction is likely to remain confined between 15 and 35 pips in deviations up to 1.5 to -3, although in some cases, if notable enough, a deviation can fuel movements of up to 50 pips.
EUR/USD Technical Levels
Haresh Menghani, Analyst at FXStreet noted, “Bulls would be looking for a move above 1.1250 resistance above which the pair is likely to challenge 1.1275-80 strong resistance, also coinciding with a short-term descending trend-line.”
“On the flip side, weakness below 1.1200 handle might continue to find support at 100-day SMA near 1.1185 region, which is closely followed by support at 200-day SMA near 1.1160 area.”
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