When is US CPI report and how could it affect EUR/USD?

US CPI Overview

Wednesday's US economic docket highlights the release of the US consumer inflation figures for January, scheduled later during the early North American session at 13:30 GMT. The headline CPI is expected to rise by 0.3% during the reported month as against 0.4% in December. Conversely, the yearly rate is anticipated to have edged higher to 1.5% from the previous month's reading of 1.4%. Meanwhile, the core CPI (excluding energy and food costs) is anticipated to have risen 0.2% MoM in January and 1.5% on yearly basis.

How could it affect EUR/USD?

Ahead of the key macro data, the US dollar staged a modest bounce from two-week lows, which, in turn, prompted some selling around the EUR/USD pair. Expectations for a massive US fiscal spending plan, along with the prevalent risk-on mood provided a modest lift to the US Treasury bond yields and helped revive the USD demand. That said, the USD lacked any bullish conviction amid doubts about a relative faster US economic recovery and the impact of the US President Joe Biden's proposed $1.9 trillion stimulus package. Hence, a minor divergence from expected readings is unlikely to provide any meaningful impetus, though might still assist traders to grab some short-term opportunities.

Meanwhile, Yohay Elam, FXStreet's own Analyst offered a brief technical outlook for the EUR/USD pair: “The Relative Strength Index is just above 70 – in overbought territory. This development indicates a correction. Moreover, while the currency pair has topped the 50 and 100 Simple Moving Averages, it is capped by the 200 SMA.”

Yohay also provided important technical levels to trade the major: “Support awaits at 1.2095, which is where the 100 SMA hits the price. It is followed by 1.2050, a robust separator of ranges. Further down, 1.20 and 1.1950 come into play. Resistance awaits at 1.2145, where the 200 SMA awaits the pair, followed by 1.2190, a stubborn cap from mid'January. Further above, 1.2225 awaits.”

Key Notes

  •  US Consumer Price Index January Preview: Can consumer demand spur prices?

  •  EUR/USD Forecast: Time to take profits? Three reasons why the euro could fall from here

  •  EUR/USD Price Analysis: Minor hurdle remains at 1.2173

About the US CPI

The Consumer Price Index released by the US Bureau of Labor Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchasing power of USD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or Bearish).