[B]Trading the News: US Consumer Price Index[/B]
[B]What is Expected
[/B]Time of release: [B]08:30 EST, 12:30 GMT 6/15/2007[/B]
Primary Pair Impact : [B]EUR/USD
[/B]Expected: [B]0.6%
[/B]Previous: [B]0.4%[/B]
[B]How To Trade This?[/B]
The US Consumer Price Index report has proven to be one of our most consistent news-trading events, allowing for solid profits in each of its past three releases. The upcoming release likewise promises to provide similar profit opportunities, as the US dollar is almost guaranteed to post strong post-news moves regardless of the outcome. Given the recent surge in domestic bond yields, investors across markets will pay very close attention to the key Consumer Price Index data.
A positive result in headline and Core CPI could potentially extend recent EURUSD declines. Swing-lows serve as the nearest floor for the EURUSD, providing a reasonable profit target on a large positive surprise in the US data. We will wait for a positive print in both results and go short the EURUSD at five minutes past time, setting stops above immediate swing-highs while initial profit targets will be set on a minimum of 1:1 risk-reward ratio.
Worse-than-expected CPI data can only force a retrace of USD gains, with recent congestion levels near 1.3378 serving as an immediate resistance. A breach of this level may see extension to the psychologically significant 1.3450 mark. Given bearish Core and headline CPI numbers, the trader may go long the EURUSD on a confirmed upward move at 08:35 EST?setting stops below immediate swing-lows.
