US CPI preview: What to expect of EUR/USD?

By FXStreet The bid tone around EUR/USD pair is recovering on the back of oil-driven weakness in the European stocks ahead of the US CPI release. The pair is trading around 1.1110 levels.

Focus on core CPI

The January CPI is seen dropping 0.1% m/m, but the headline figure is still seen jumping 1.3% y/y. The month-on-month drop may not come as a surprise to the markets since oil prices fell sharply in December-Jan period. Consequently, the focus is likely to be more on the core-CPI number.

CPI ex-food and energy (core) is seen rising 0.2% m/m and 2.1% y/y. Fed minutes released earlier this week showed policymakers still expect inflation to rise to 2% over the medium term. Hence, the greenback could strengthen ahead of the weekend if the core figure rises expected/more-than-expected.

On the other hand, a weaker than expected core number could weigh over USD, although losses may not be significant if the oil prices extend gains and weigh over equities; leading to a rise in demand for the EUR.

EUR/USD Technical Levels

The immediate resistance is seen at 1.1152 (5-DMA), which if taken out shall open doors for a rally to 1.12 (10-DMA). A break higher would shift risk …read more

Source:: FX Street