Signs of stronger price growth may keep the Fed on course to raise the benchmark interest rate later this year, but a continuation of the disinflationary environment may encourage the central bank to retain the zero-interest rate policy (ZIRP) beyond 2015 in an effort to encourage a more sustainable recovery.
However, subdued input costs paired with the persistent slack in the
real economy may continue to drag on price growth, and a dismal CPI
print may generate a further near-term advance in EUR/USD as market
participants push back for the Fed liftoff.
How To Trade This Event Risk
Bullish USD Trade: U.S. CPI Rebounds 0.1% or Greater
- Need to see red, five-minute candle following the release to consider a short trade on EUR/USD.
- If market reaction favors a bullish dollar trade, sell 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 bullish dollar trade, just in reverse.
EURUSD Daily
- Despite the more cautious tone coming out of the Federal Reserve, EUR/USD may continue to face range-bound prices over the near-term as it fails to break out of the monthly opening range.
- Interim Resistance: 1.1510 (61.8% expansion) to 1.1532 (February high)
- Interim Support: 1.0970 (38.2% expansion) to 1.1000 (50% retracement)
Period | Data Released | Estimate | Actual | Pips Change (1 Hour post event ) | PipsChange (End of Day post event) |
---|---|---|---|---|---|
APR 2015 |
05/22/2015 12:30 GMT |
-0.2% | -0.2% | -144 | -165 |
March 2015 U.S. Consumer Price Index
EURUSD M5: 140 pips price movement by USD - Consumer Price Index news event: