A further slowdown in the Euro-Zone’s Consumer Price Index (CPI) may
heighten the bearish sentiment surrounding the EUR/USD as it puts
increased pressure on the European Central Bank (ECB) to implement more
non-standard measures.
What’s Expected:
Why Is This Event Important:
There’s growing bets that the Governing Council may have little choice
but to implement quantitative easing across the monetary union amid the
growing threat for deflation, and the single currency remains at risk of
facing additional headwinds in 2015 as the economic recovery remains
subdued.
However, the CPI report may show sticky price growth in Europe as the
region returns the growth, and a stronger-than-expected inflation print
may trigger a more meaningful correction in EUR/USD as it mitigates the
risk for deflation.
How To Trade This Event Risk
Bearish EUR Trade: Euro-Zone CPI Slips to 0.3% or Lower
- Need red, five-minute candle following the release to consider a short EUR/USD trade
- If market reaction favors selling Euro, short EUR/USD with two separate position
- Set stop at the near-by swing high/reasonable distance from entry; look for at least 1:1 risk-to-reward
- Move stop to entry on remaining position once initial target is hit, set reasonable limit
- Need green, five-minute candle to favor a long EUR/USD trade
- Implement same setup as the bearish Euro trade, just in opposite direction
EUR/USD Daily Chart
- Will continue to look for lower highs & lows as the downward trending channel remains in play.
- Interim Resistance: 1.2610 (61.8% expansion) to 1.2620 (50% retracement)
- Interim Support: 1.2280 (100% expansion) to 1.2290 (38.2% expansion)
Period | Data Released | Estimate | Actual | Pips Change (1 Hour post event ) | Pips Change (End of Day post event) |
---|---|---|---|---|---|
OCT 2014 | 10/31/2014 10:00 GMT | 0.4% | 0.4% | + 14 | - 41 |