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EUR/USD – Trading the Eurozone CPI Flash Estimate

Eurozone CPI Flash Estimate is an inflation index which measures the change in the price of goods and services charged to consumers. A reading which is higher than the market forecast is bullish for the euro.

Here are all the details, and 5 possible outcomes for EUR/USD.

Published on Tuesday at 10:00 GMT.

Indicator Background

Analysts consider CPI one of the most important economic indicators, and the release of  Eurozone CPI can have a major impact on the direction of EUR/USD.

Eurozone CPI  posted  a weak gain of 0.1% in November, within expectations. The markets are expecting a  stronger gain in the December report, with an estimate of 0.4%.

Sentiments and levels

With the markets  back to  work, monetary policy divergence remains the name of the game: the lack of euro-zone inflation  is a  reminder  that the ECB could still introduce more easing. Even if US  numbers are weak, the Fed is set to hike again early in the year.  So, the overall sentiment is bearish on EUR/USD towards this release.

Technical levels, from top to bottom: 1.1140, 1.1050, 1.10, 1.0925, 1.0850, and 1.08.

5 Scenarios

  1. Within expectations: 0.1% to 0.7%. In this scenario, EUR/USD could show some slight fluctuation, but it is likely to remain within range, without breaking any levels.
  2. Above expectations: 0.8% to 1.2%: A stronger reading than predicted could push the pair above one resistance line.
  3. Well above expectations: Above 1.2%: An unexpectedly sharp rise in inflation could push EUR/USD upwards, breaking a second resistance line.
  4. Below expectations: -0.3% to 0.0%: A  reading of zero  or lower  could pull the pair downwards, with one support level at risk.
  5. Well below expectations: Below -0.3%: A weaker reading than expected could see EUR/USD break below a second  support level.

For more on the euro, see the EUR/USD forecast.

Kenny Fisher

Kenny Fisher

Kenny Fisher - Senior Writer A native of Toronto, Canada, Kenneth worked for seven years in the marketing and trading departments at Bendix, a foreign exchange company in Toronto. Kenneth is also a lawyer, and has extensive experience as an editor and writer.