Strong U.S. Consumer Price Index (CPI) to Fuel EUR/USD Pullback


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06/12/2018 12:30:00 GMT





May 2018 U.S. Consumer Price Index (CPI)

EUR/USD 5-Minute Chart

The U.S. Consumer Price Index (CPI) was largely in-line with market expectations as the headline reading increased 2.8% per annum in May, while the core rate highlighting a similar dynamic as the reading climbed to 2.2% from 2.1% in April. However, a deeper look at the report showed Real Average Hourly Earnings were flat in May after expanding 0.2% the month prior, while Real Average Weekly Earnings narrowing to 0.3% from a revised 0.5% during the same period.

The initial reaction to mixed data prints were short-lived, with EUR/USD consolidating throughout the North American trade to end the day at 1.1745. Sign up and join DailyFX Currency Analyst David Song LIVE to cover the fresh updates to the CPI report.

EUR/USD Daily Chart

  • EUR/USD stands at risk of facing range-bound prices as it snaps the recent series of higher highs & lows following the failed attempt to test the June-high (1.1852).
  • Lack of momentum to test the 1.1810 (61.8% retracement) region may pave the way for a larger pullback, with a break/close below the 1.1640 (23.6% expansion) to 1.1680 (50% retracement) region bringing the June-low (1.1508) on the radar, which lines up with the 1.1510 (38.2% expansion) hurdle.

For more in-depth analysis, check out the Q3 Forecast for EUR/USD

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— Written by David Song, Currency Analyst

Follow me on Twitter at @DavidJSong.

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

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