US CPI Overview
Tuesday's US economic docket highlights the release of the critical US consumer inflation figures for June, scheduled later during the early North American session at 12:30 GMT. The headline CPI is expected to decelerate a bit to 0.5% during the reported month from the 0.6% increase recorded in May. The yearly rate is also anticipated to have edged lower to 4.9% in June from 5.0% previous, though remain significantly above the Fed's 2% target. At the core level, the CPI is projected to rise 4.0% YoY rate as against 3.8% previous.
How Could it Affect EUR/USD?
The June FOMC meeting minutes released last Wednesday revealed that Fed officials agreed on the need to be ready to act if inflation or other risks materialize. A stronger print will further fuel market expectations that the Fed is moving towards tightening its monetary policy stance sooner than anticipated. This should be enough to provide an additional boost to the already stronger US dollar and pave the way for some meaningful downside for the EUR/USD pair.
Conversely, a softer reading will add credence to the Fed's analysis that the recent sharp rise in inflationary pressure is nothing more than transitory. This could take its toll on the greenback and assist the EUR/USD pair to build on its recent bounce from over three-month lows, around the 1.1780 region touched last week.
Meanwhile, Yohay Elam, FXStreet's own Analyst offered a brief technical outlook for the EUR/USD pair: “Euro/dollar is benefiting from upside momentum on the four-hour chart and trades above the 50 Simple Moving Average. Critical resistance awaits at 1.1880, which held the currency pair down in recent days and also in early July. Moreover, that is where the 100 SMA hits the price.”
Yohay also provided important technical levels to trade the major: “Further above, another cap awaits at 1.1895, a swing high from last week, and then at 1.1945, and 1.1975. Support is at 1.1825, which provided support late last week, then 1.1805, a swing low from early in the week. The next cushion is the multi-month trough of 1.1781.”
Key Notes
• US Consumer Price Index June Preview: Has inflation peaked?
• EUR/USD Forecast: Time to rally? Why US inflation could miss estimates, 1.1880 critical
• EUR/USD comes under pressure around 1.1850
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).
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stays below 1.0900 as Q1 comes to an end
EUR/USD has lost its traction and declined below 1.0900 in the American session on Friday. Quarter-end flows seem to be allowing the US Dollar find some demand but the risk-positive market environment seems to be limiting the pair's downside ahead of the weekend.
GBP/USD trades below 1.2400, looks to post weekly gains
GBP/USD has edged lower after having tested 1.2400 earlier in the day but remains on track to end the third straight week in positive territory. The upbeat mood remains intact after soft PCE inflation data from the US, making it difficult for the US Dollar to continue to gather strength.
Gold tries to stabilize near $1,980 following earlier spike
Gold price has returned to the $1,980 area following a spike above $1,987 with the initial reaction to lower-than-expected PCE inflation figures from the US. Meanwhile, the benchmark 10-year US Treasury bond yield stays in the red near 3.5%, providing support to XAU/USD.
Will Dogecoin price pull an XRP and rally 60% next week?
Dogecoin price has been in a tight range bound movement since November 22. The recent recovery above the range low looks promising and hints at an explosive move for next week.
Week ahead – Nonfarm payrolls to set the tone for US dollar
With the banking turmoil receding, market participants will turn their attention back to economic releases. The spotlight will fall on the US employment report.