EUR/USD how the U.S. CPI data can affect the price direction?
In this post I will mention how the U.S. CPI data can affect the price direction?
- The forecasted CPI data is expected to show a rise to 4% following the previous release of 3.8%, I expect the following possibilities,
1- less than 3.8% ( The “transitory” camp will be pleased to see a small drop in the pace of price rises, and so it will help the dollar rise to break below 1.1780 with a maximum target of 1.1700 ).
2- 4% - more than 4% ( It will increase the momentum of the bullish stance and would cause a movement of a bullish reversal, to break above 1.1950 with a maximum target of 1.2100 ).
FUNDAMENTAL KEY QUOTES
1- FOMC analysis and FED fiscal policy update ( Federal Reserve Officials were not ready to communicate a timeline for tapering due to high uncertainty on the economic outlook, according to the minutes from their June meeting, the gathering also marked a turn in the central bank's comfort with inflation risks amid heightened price pressures as the economy reopens from the pandemic, the minutes showed the committee had a lot of questions about how soon labor shortages and supply bottlenecks contributing to inflation would resolve ).
2- ECB monetary policy update ( ECB has agreed to raise inflation goal to 2% and allow room to overshoot it when needed, the revamped strategy could give officials the justification for sustaining ultra-lose monetary policy for longer as they strive to reverse years of below target inflation which have weighed on the euro area economic potential ).
3- ECB fiscal policy update ( ECB gears up to spend billions of euros on stimulus ).
4- EU economic outlook update ( the commission boosted its growth forecast for the euro area to 4.8% from 4.3% previously, but the bloc said will have to "keep a close eye on rising inflation driven in part by stronger demand" ).
5- EU-U.S. calendar analysis ( drop in Germany data, drop in U.S. data, only that the U.S. continuing claims fell to a pandemic low ).
6- EU-U.S. tourism situation update ( in U.S. the transportation Secretary Pete Buttigieg told Bloomberg TV that the Biden's administration isn't yet ready to lift restrictions on international travel to U.S. even as it touts progress against Covid-19 in other areas, including domestic travel, in EU the system has limitations and travel will remain hampered by a patch work of national restrictions ).
7- EU - U.S. inoculation update ( both missing inoculation targets, rising infections in both areas).
What price action to expect ahead?
- ACCORDING TO FUNDAMENTALS,FOMC RELEASES, AHEAD OF CPI DATA, I WOULD SAY THAT THE DOWNTREND HAS TOTALLY LOST MOMENTUM AND THAT A STRONG PULLBACK / REVERSAL IS EXPECTED TO TAKE PLACE -
- NEW PRICE RANGE ( 1.1850 - 1.2100 ) - FAKE OUTS OR OPTIMISM TO A DROP IN CPI AHEAD MAKES THE SUPPORT 1.1820 IS THE HARDEST TO BREAK -
- THIS OUTLOOK REMAINS ONLY TILL UPCOMING NEWS AND DATA THAT MAY CHANGE THE PRICE RANGE, SO I WILL UPDATE ACCORDINGLY -
- The forecasted CPI data is expected to show a rise to 4% following the previous release of 3.8%, I expect the following possibilities,
1- less than 3.8% ( The “transitory” camp will be pleased to see a small drop in the pace of price rises, and so it will help the dollar rise to break below 1.1780 with a maximum target of 1.1700 ).
2- 4% - more than 4% ( It will increase the momentum of the bullish stance and would cause a movement of a bullish reversal, to break above 1.1950 with a maximum target of 1.2100 ).
FUNDAMENTAL KEY QUOTES
1- FOMC analysis and FED fiscal policy update ( Federal Reserve Officials were not ready to communicate a timeline for tapering due to high uncertainty on the economic outlook, according to the minutes from their June meeting, the gathering also marked a turn in the central bank's comfort with inflation risks amid heightened price pressures as the economy reopens from the pandemic, the minutes showed the committee had a lot of questions about how soon labor shortages and supply bottlenecks contributing to inflation would resolve ).
2- ECB monetary policy update ( ECB has agreed to raise inflation goal to 2% and allow room to overshoot it when needed, the revamped strategy could give officials the justification for sustaining ultra-lose monetary policy for longer as they strive to reverse years of below target inflation which have weighed on the euro area economic potential ).
3- ECB fiscal policy update ( ECB gears up to spend billions of euros on stimulus ).
4- EU economic outlook update ( the commission boosted its growth forecast for the euro area to 4.8% from 4.3% previously, but the bloc said will have to "keep a close eye on rising inflation driven in part by stronger demand" ).
5- EU-U.S. calendar analysis ( drop in Germany data, drop in U.S. data, only that the U.S. continuing claims fell to a pandemic low ).
6- EU-U.S. tourism situation update ( in U.S. the transportation Secretary Pete Buttigieg told Bloomberg TV that the Biden's administration isn't yet ready to lift restrictions on international travel to U.S. even as it touts progress against Covid-19 in other areas, including domestic travel, in EU the system has limitations and travel will remain hampered by a patch work of national restrictions ).
7- EU - U.S. inoculation update ( both missing inoculation targets, rising infections in both areas).
What price action to expect ahead?
- ACCORDING TO FUNDAMENTALS,FOMC RELEASES, AHEAD OF CPI DATA, I WOULD SAY THAT THE DOWNTREND HAS TOTALLY LOST MOMENTUM AND THAT A STRONG PULLBACK / REVERSAL IS EXPECTED TO TAKE PLACE -
- NEW PRICE RANGE ( 1.1850 - 1.2100 ) - FAKE OUTS OR OPTIMISM TO A DROP IN CPI AHEAD MAKES THE SUPPORT 1.1820 IS THE HARDEST TO BREAK -
- THIS OUTLOOK REMAINS ONLY TILL UPCOMING NEWS AND DATA THAT MAY CHANGE THE PRICE RANGE, SO I WILL UPDATE ACCORDINGLY -
Note
The CPI showed a surge to 4.5% but unlike my idea the price declined to 1.1790, the reason is nothing more that investors are optimistic that tomorrow in the Powell's testimony will be announce to tapering asset purchases to control the inflation rise, just the investors concluded this in advance and I see it looks nonsense, higher inflation means less currency value unless actions are done not expected. If really will be tapering announce then the USD can gain up to 1.1650.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.