German CPI Preview: What to expect of EUR/USD?

The EUR/USD pair managed to reverse a brief dip below 1.04 handle, although hovers within close proximity of the daily lows amid resurgent USD buying and positive European equities.

Attention now turns towards the German CPI report due ahead of the US open for fresh impetus on the EUR.

Solid regional y/y CPI readings point to a firmer nationwide print

The German inflation data is up for release later this session, with the CPI figures expected to tick lower to +0.1% in Nov, versus +0.2% growth seen a month ago, while adding 0.8% annually, compared to the 0.7% result reported in Oct.

Germany's regional CPIs released earlier today painted a shiny picture of the harmonized German CPI report, with Brandenburg inflation for the month of Dec MoM coming in at +0.7% vs +0.1% prev, while the YoY was +1.7% vs 1.0% prev. In Hesse, MoM came in at 0.9% versus +0.0% prev, while YoY rose +1.9%, versus +0.8% prev. Meanwhile, in Bavaria, the MoM came in at 0.7% vs 0.0% prev, with YoY rising to +1.7% vs +0.8% last. 

However, the German CPI report is expected to have significant impact on the EUR/USD pair, and could rescue the bulls from the latest move lower towards 1.0400 levels

EUR/USD Technical Levels

Valeria Bednarik, Chief Analyst at FXStreet notes, “The pair is biased lower, as in the 4 hours chart, the Momentum indicator heads sharply lower within negative territory, while the RSI indicator extend its slide, heading south now around 41. Furthermore, the price is below all of its moving averages, having met selling interest around a bearish 100 SMA that converges with the 20 SMA in the 1.0490 region, providing a strong intraday dynamic resistance.”

“The immediate support is 1.0420, which means that it will take a clear break below the level to confirm additional slides with 1.0370/80 as the next support area, en route to 1.0352, the multi-year low posted last December.”