Weak Euro-Zone Core CPI to Drag on EUR/USD Rebound


Data Released



Pips Change

(1 Hour post event )

Pips Change

(End of Day post event)



08/31/2017 09:00:00 GMT





August 2017 Euro-Zone Consumer Price Index (CPI)

EUR/USD 5-Minute

The advance reading for the Euro-Zone Consumer Price Index (CPI) showed the headline figure climbing an annualized 1.5% from 1.3% in July to mark the first pickup since April. Nevertheless, the core rate of inflation held steady at an annualized 1.2% for the second consecutive month in August, which was largely in-line with market expectations. The Euro struggled to hold its ground following the mixed data prints, with EUR/USD pulling back from the 1.1900 handle, but the pair regained its footing during the North American trade to end the day at 1.1909.

How To Trade This Event Risk(Video)

Bearish EUR Trade: Core Inflation Remains Subdued

  • Need a red, five-minute candle following the CPI report to favor a short EUR/USD setup.
  • If market reaction favors a bearish Euro trade, sell EUR/USD with two separate lots.
  • Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward.
  • Move stop to breakeven on remaining position once initial target is met, set reasonable limit.

Bullish EUR Trade: Euro-Zone CPI Exceeds Market Forecast

  • Need a green, five-minute EUR/USD candle to favor a long Euro setup.
  • Carry out the same setup as the bearish Euro trade, just in reverse.

Potential Price Targets For The Release

EUR/USD Daily Chart

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  • EUR/USD stands at risk for a larger pullback as both price and the Relative Strength Index (RSI) snap the bullish formations from earlier this year, with the near-term outlook capped by the 1.2130 (50% retracement) hurdle.
  • The Fibonacci overlap around 1.1670 (50% retracement) to 1.1680 (50% retracement) remains on the radar as it largely lines up with the August-low (1.1662), with the next downside region of interest coming in around 1.1580 (100% expansion).
  • Interim Resistance: 1.2320 (23.6% retracement) to 1.2370 (61.8% expansion)
  • Interim Support: 1.1390 (61.8% retracement) to 1.1400 (61.8% expansion)

EUR/USD Retail Sentiment

Track Retail Sentiment with the New Gauge Developed by DailyFX Based on Trader Positioning

Retail trader data shows 40.4% of traders are net-long EUR/USD with the ratio of traders short to long at 1.48 to 1. In fact, traders have remained net-short since April 18 when EUR/USD traded near 1.07831; price has moved 9.3% higher since then. The number of traders net-long is 3.0% lower than yesterday and 18.0% higher from last week, while the number of traders net-short is 3.0% lower than yesterday and 11.4% lower from last week.

— Written by David Song, Currency Analyst

To contact David, e-mail dsong@dailyfx.com. Follow me on Twitter at @DavidJSong.

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

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