US CPI Overview
Tuesday’s US economic docket highlights the release of the US consumer inflation figures for April, later during the early North American session at 12:30 GMT. The headline CPI is expected to drop for the second straight month and come in -0.8% for April. The yearly rate is anticipated to have decelerated sharply to 0.4% as compared to a 1.5% rise recorded in March. Meanwhile, core CPI, which excludes energy and food costs, is predicted to fall 0.2% and come in at 1.7% YoY rate, down from 2.1% previous.
How could it affect EUR/USD?
Given that investors might have already started pricing in a slim chance of negative Fed interest rates next year, softer-than-expected readings might be enough to prompt some US dollar weakness. This, in turn, should assist the EUR/USD pair to built on its steady intraday positive move. The pair was last seen trading just below mid-1.0800s and any subsequent appreciating move is likely to confront some resistance near the 1.0875 region ahead of the 1.0900 round-figure mark.
According to Yohay Elam, NDDFX’s own analyst, Resistance is a 1.0855, which capped it several times and is where the 100 SMA hits the price. The stubborn cap of 1.0890 is the next line to watch and it is followed by 1.0925 and 1.0970. Support awaits at 1.0780, which is where the uptrend support line hits the price. It is followed by 1.0765, May’s low, and then by 1.0730, April’s trough.
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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).