Today at 16:30 (GMT) the U.S. Consumer Price Index (CPI), Personal Consumption Expenditures (PCE) and Producer Price Index (PPI) for July will be released.
Today’s release will follow yesterday’s PPI data and it should be said that yesterday’s readings exceeded all optimistic expectations.
The PPI was forecast to fall to 2.3% (y/y) from 2.6% in the previous period. The actual reading was 2.2%.
The monthly index was expected to remain at the same level of 0.2%. In fact, there was a decrease to 0.1%.
It was expected that the core (month-to-month) index would decrease from 0.4% to 0.2%, but it turned out to be 0.0%.
Such a decrease in inflationary pressure in producer prices could not but encourage investors and traders, which immediately led to a sharp strengthening of the EURUSD currency pair.
Today, traders are likely to wait for the continuation of yesterday’s momentum in the form of a drop in the Consumer Price Index (CPI). Forecast expectations for the CPI are quite conservative. On a yearly basis, the index is expected to remain at the same level of 3.0%. On a monthly basis, the index is forecast to rise from -0.1% to 0.2%.
When choosing a trading plan to work out a strong impulsive move in EURUSD, consider a scenario in which the actual values of consumer inflation are higher than both the forecast and the previous readings.
Technical oscillators also point to a likely downward movement in EURUSD.
The overall recommendation is to sell EURUSD if July CPI figures are higher than those of June.
Profit could be taken at 1.0950. A stop loss could be set at 1.1010.
The volume of the opened position should be set so that the value of a possible loss, defined with a protective stop order, does not exceed 2% of your deposit.
