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

US CPI Overview

Wednesday's US economic docket highlights the release of the critical US consumer inflation figures for April, scheduled later during the early North American session at 12:30 GMT. The headline CPI is expected to rise by a modest 0.2% during the reported month. Conversely, the yearly rate is anticipated to have accelerated to 3.6%, significantly above the Fed's 2% target. At the core level, the CPI is expected to be more restrained to a 2.3% YoY rate as against 1.6% in March.

Analysts at Citibank offered their forecast for the upcoming US CPI report: “We expect a solid 0.301% increase in core CPI in April but would not be surprised by an even stronger increase that rounds to 0.4%. More persistent increases in shelter prices would be a sign that underlying inflation pressures are picking up and core PCE inflation above 2% YoY can be sustained through 2022.”

How could it affect EUR/USD?

Investors now seem worried that maybe inflation is something more than transitory – as described by the Fed. Hence, a stronger reading might fuel speculations that the Fed might be forced to hike interest rates earlier than expected, which should act as a positive trigger for the USD. That said, the US central bank has indicated that it is willing to let inflation run hot for some time. This, in turn, suggests that any knee-jerk market reaction is more likely to be short-lived.

Meanwhile, Yohay Elam, FXStreet's own Analyst offered a brief technical outlook for the EUR/USD pair: “The Relative Strength Index (RSI) on the four-hour chart has drifted down and now maintains a considerable distance from the 70 level – thus remaining far from overbought conditions. Euro/dollar trades above the 50, 100 and 200 Simple Moving Averages (SMAs), and momentum remains to the upside.”

Yohay also provided important technical levels to trade the major: “Some resistance awaits at 1.2150, which was April's peak, and it is followed by May's high of 1.2180. Further above, the upside target is 1.2250. Support awaits at the daily low of 1.2120, followed by 1.2075, which is where the 50 and 100 SMAs converge. Lower, 1.2055 and 1.2015 await the pair.”

Key Notes

  •   US Consumer Price Index April Preview: The two base effects of inflation

  •   US CPI Preview: Forecasts from eight major banks

  •   EUR/USD Forecast: Sell the rumor, buy the fact? Why US inflation data may trigger a rally

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).