Euro Skyrockets As Inflation Report Looms

The Euro (EUR) rallied against the US Dollar (USD) on Wednesday, increasing the price of EUR/USD to more than 1.0700 ahead of the Eurozone Consumer Price Index (CPI) report which is considered a key gauge for inflation.  The technical bias remains bullish because of a higher low in the recent downside wave.

Technical Analysis

As of this writing, the pair is being traded around 1.0719. A hurdle may be noted near 1.0800, the psychological number ahead of 1.0828, the short-term horizontal resistance and then 1.0915, the high of the last major upside move on higher timeframes. A break and hourly closing above the 1.0915 resistance shall incite renewed buying interest, validating a move towards the 1.1000 resistance which is a critical psychological level.

On the downside, a support may be seen near 1.0684, the 38.2% fib level support area as demonstrated in the given above hourly chart ahead of 1.0666, the confluence of 50% fib level as well as lower trendline and then 1.0651, the pink trendline support as well as 61.8% fib level. The technical bias shall remain bullish as long as the 1.0651 support zone is intact.

How EUR/USD Reacted on Past CPI Releases?

The EUR/USD fell by more than 50 pips after the release of Eurozone Consumer Price Index data last month. The CPI registered 1.5% reading in March as compared to the forecast of 1.8%, the report released on 31st March 2017 revealed.

The pair, however, didn’t show any noticeable volatility after the release of February’s CPI report because the actual figure was in line with the projections of economists i.e. 2.0% vs 2.0% forecast.

Trade Idea

Considering the overall technical and fundamental outlook, selling the pair around current levels can be a good strategy if the CPI data comes worse than forecast and vice versa.

What Assets to Trade?

In addition to EUR/USD, trading EUR/GBP, EUR/AUD, EURJPY and EURCAD can also be a good move as the aforementioned pairs are highly reactive to the Eurozone’s CPI release.

 

usmanahmed7290@gmail.com'

Usman Ahmed

Usman Ahmed is an individual forex trader and market analyst. He holds a Masters of Business Administration (MBA) degree. His work includes fundamental and technical reports on various currency pairs, commodity futures and stock markets. His technical analysis features price action strategies.

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