When is the US CPI report and how could it affect EUR/USD?

Haresh Menghani FXStreet

US June CPI Overview

Wednesday's US economic docket highlights the release of the latest consumer inflation figures, due later during the early North-American session at 12:30GMT. The headline CPI is anticipated to remain flat month-on-month (m/m) in June as compared to a modest rise of 0.1% in the previous month, while the yearly rate is expected to have decelerated to 1.6% from 1.8% in May. On the other hand, core CPI - excluding food and energy costs, is predicted to tick higher to 0.2% m/m rate as against 0.1% rise recorded in April, helping the annual core inflation to hold steady at 2.0%.

As analysts at TD Securities explain - “Core inflation should remain steady at 2.0% y/y, reflecting a firm 0.2% m/m advance. We pencil in a 0.2% m/m increase in core services and a flat reading in core goods, which should help buoy core CPI overall.”

Deviation impact on EUR/USD

Readers can find FX Street's proprietary deviation impact map of the event below and as observed, the reaction in case of a relative deviation of +0.98 to -0.98 in the core CPI print is likely to be in the range of 26-25 pips during the first 15-minutes and could stretch to 55-71 pips in the following 4-hours.

How could it affect EUR/USD?

Market participants will scrutinize the data for clues over the Fed's near-term monetary policy outlook ahead of the next meeting later this July. A 25 bps rate cut is fully factored in and against the backdrop of the Fed Chair Jerome Powell's dovish testimony on Wednesday, a softer than expected reading will be enough to fuel expectations for an aggressive easing cycle in 2019 and exert some additional pressure on the already weaker US Dollar.

Yohay Elam, FXStreet's own Analyst offered his take on the EUR/USD pair and also provided important technical levels to watch for – “The technical picture for EUR/USD has significantly improved. The world's most popular currency has set a higher low at 1.1195 and has crossed above the 50 and 200 Simple Moving Averages on the four-hour chart. Moreover, momentum has turned positive and the Relative Strength Index is on the rise.”

“The 100 SMA at the round number of 1.1300 may serve as resistance but the more significant caps are higher. 1.1320 capped EUR/USD in early July, while 1.1350 served as support in late June. The next lines to watch are 1.1390 and .11410. Some support awaits at 1.1270 which held up EUR/USD last week. It is followed by 1.1235 which held it down earlier this week and by the weekly low of 1.1195,” he added further.

Key Notes

• US CPI Preview: Inflation is secondary

• Powell's Power Play: Fed's five dollar downers – EUR/USD levels to watch

• EUR/USD Technical Analysis: Interim hurdle aligns at the 21-day SMA at 1.1283 ahead of the 200-day SMA

About the US CPI

The Consumer Price Index released by the US Bureau of Labor Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchasing power of USD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or Bearish).

Author

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

EUR/USD onsolidates around mid-1.1800s as traders keenly await FOMC Minutes

The EUR/USD pair struggles to capitalize on the previous day's goodish rebound from the 1.1800 neighborhood, or a one-and-a-half-week low, and consolidates in a narrow band during the Asian session on Wednesday. Spot prices currently trade just below mid-1.1800s, nearly unchanged for the day.

GBP/USD seems vulnerable near mid-1.3500s; UK CPI/FOMC Minutes awaited

The GBP/USD pair struggles to capitalize on the previous day's late rebound from an over one-week low – levels below the 1.3500 psychological mark – and trades with a negative bias for the third consecutive day on Wednesday. The downside, however, remains cushioned as investors seem reluctant to place aggressive directional bets ahead of the release of the latest UK consumer inflation figures and FOMC Minutes.

Gold bounces back toward $4,900, looks to FOMC Minutes

Gold is attempting a bounce from the $4,850 level, having touched a one-week low on Tuesday. Signs of progress in US–Iran talks dented demand for the traditional safe-haven bullion, weighing on Gold in early trades. However, rising bets for more Fed rate cuts keep the US Dollar bulls on the defensive and act as a tailwind for the non-yielding yellow metal. Traders now seem reluctant ahead of the FOMC Minutes, which would offer cues about the Fed's rate-cut path and provide some meaningful impetus.

Top Crypto Gainers: Jito drops, Morpho holds steady, Convex Finance climbs

Decentralized Finance tokens, including Jito, Morpho, and Convex Finance, rank among the top-performing crypto assets over the last 24 hours. Jito dips on Wednesday after rallying 22% the previous day on the launch of a new mainnet node.

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.