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

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).