FOREX NEWS: BRITISH AND U.S. INFLATION DATA GUARANTEE A VOLATILE TRADING DAY
EUR/USD
Forex News: Yesterday’s price action was slow and rather choppy, with the pair descending close to the previous low even if the European Final CPI showed a better value than analysts’ expected.
Technical Outlook
The bullish trend line we mentioned a day earlier is now broken and the bears seem to gather up strength so we expect a touch and a consequent break of 1.0660 support. However, there is not a lot of strong movement and both bears and bulls seem undecided so if the pair will touch 1.0660 today, we expect it to bounce higher on the first attempt to break it; this can all change, depending on US inflation data.
Fundamental Outlook
The German ZEW Economic Sentiment survey is released today at 10:00 am GMT and expected to show a value of 6.7 compared to the previous 1.9. Higher readings are beneficial for the Euro but the day’s main event will be the release of the U.S. Consumer Price index, scheduled at 1:30 pm GMT. The CPI is the main gauge of inflation and inflation plays a major role in Fed’s decision to raise the interest rate or to keep it unchanged. Higher values than the forecast 0.2% (previous -0.2%) will most likely strengthen the US Dollar. Pay attention to the CORE version of the indicator (excludes food and energy), released at the same time.
GBP/USD
The Pound-Dollar pair also had a slow and choppy session, with price grinding below the lower boundary of the horizontal channel. Even if this barrier was broken, we cannot deem the move a breakout.
Technical Outlook
Before we can consider 1.5200 support broken, we have to see a move below it, followed by a successful re-test. Until this scenario occurs, the market is still ranging and in indecision mode. The 50 period Exponential Moving Average is flat, confirming the pair doesn’t have clear direction but all this can change today when British inflation data comes out.
Fundamental Outlook
At 9:30 am GMT the British Consumer Price Index is released. Since this is the most important gauge of overall inflation, its outcome usually has a strong impact on the Pound and a higher change than the forecast -0.1% (previous -0.1%) can positively impact the Pound.