When is US CPI report and how could it affect EUR/USD?

US CPI Overview

Friday's US economic docket highlights the release of the critical US consumer inflation figures for November, scheduled later during the early North American session at 13:30 GMT. The headline CPI is anticipated to edge lower 0.7% during the reported month from the 0.9% rise recorded in October. Conversely, the yearly rate is expected to show prices rising at their fastest pace since 1982 and accelerate to 6.8% in November from 6.2% previous. 
Meanwhile, core inflation, which excludes food and energy prices, is projected to rise 4.9% from a year ago as against 4.6% in October.

As Joseph Trevisani, Senior Analyst at FXStreet, explains: “Recent results from producer prices, wages, employment and gasoline suggest that the surge in consumer prices is not abating. Higher material production costs and rising wages, which firms will quickly pass on to consumers, indicate that the upward pressure on retail prices has not slackened.”

How Could it Affect EUR/USD?

Ahead of the key release, the US dollar remained well supported by the prospects for an early policy tightening by the Fed amid rising inflationary pressures. A stronger print will reinforce expectations that the Fed would adopt a more aggressive policy response to contain stubbornly high inflation. This should result in higher US Treasury bond yields and a stronger USD.

Conversely, a softer print – though seems unlikely – might do little to prompt any aggressive USD selling heading into the FOMC monetary policy meeting on December 14-15. This, in turn, suggests that the path of least resistance for the EUR/USD pair is to the downside. Nevertheless, the data is set to infuse a fresh bout of volatility in the markets and produce some meaningful trading opportunities.

From current levels, the weekly swing low, around the 1.1230-25 region, might protect the immediate downside for the EUR/USD pair ahead of the YTD low – levels just below the 1.1200 mark. Some follow-through selling will be seen as a fresh trigger for bearish traders and turn the pair vulnerable to accelerate the slide to the 1.1145 intermediate support en-route the 1.1100 round figure.

On the flip side, momentum back above the 1.1300 mark might continue to confront some resistance near mid-1.1300s. This is followed by the recent swing high, around the 1.1380-85 area touched on November 30, which if cleared decisively could prompt some short-covering move. The EUR/USD pair might then surpass the 1.1400 mark and aim to test the next relevant hurdle near the 1.1440 region.

Key Notes

  •   US Consumer Price Index November Preview: Inflation is the new cause celebre

  •   US CPI Preview: Forecasts from nine major banks, more acceleration?

  •   EUR/USD Price Analysis: Struggle with 21-DMA continues ahead of US inflation

About the US CPI

The Consumer Price Index released by the US Bureau of Labor Statistics is a measure of price movements by the comparison between the retail prices of a representative shopping basket of goods and services. The purchasing power of USD is dragged down by inflation. The CPI is a key indicator to measure inflation and changes in purchasing trends. Generally speaking, a high reading is seen as positive (or bullish) for the USD, while a low reading is seen as negative (or Bearish).