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

US CPI Overview

Wednesday's US economic docket highlights the release of the critical US consumer inflation figures for December, scheduled later during the early North American session at 13:30 GMT. The headline CPI is anticipated to come in at 0.4% during the reported month, down from the 0.0% reported in November. Conversely, the yearly rate is projected to rise from 6.8% previous to a fresh multi-decade high level of 7% in December. Meanwhile, core inflation, which excludes food and energy prices, is anticipated to accelerate to 5.4% from a year ago as against 4.9% in November.

As Joseph Trevisani, Senior Analyst at FXStreet, explains: “The US economy is set to deliver another year of soaring prices in 2022 as it closes out a 40-year record in December. Manufacturing production is bedeviled by component and raw material shortages, the global supply chain is creaking under labor and pandemic restrictions and workers are demanding higher wages as firms compete for scarce employees.”

How Could it Affect EUR/USD?

A stronger than expected print will reinforce market bets for an eventual Fed lift-off in March 2022 and should provide a modest lift to the US dollar. Conversely, a softer reading – though seems unlikely – might do little to calm market fears about a faster policy tightening by the Fed. This, in turn, suggests that the path of least resistance for the USD is to the upside and down for the EUR/USD pair.

Meanwhile, Eren Sengezer, Editor at FXStreet, provided important technical levels to trade the major: “On the downside, 1.1340 (previous resistance, 20-period SMA) aligns as first support and sellers could come back into play if a four-hour candle closes below that level. 1.1320 (100-period SMA) and 1.1300 (200-period SMA, psychological level) could be seen as the next support levels.”

“In case the pair manages to climb above 1.1380 (static level) and starts using it as support, 1.1400 (psychological level) could be targeted before 1.1440 (static level),” Eren added further.

Key Notes

  •   US Consumer Price Index December Preview: The Fed’s die is cast

  •   US Inflation Preview: Dizzying heights of 7% would cement a March hike, supercharge the dollar

  •   EUR/USD Forecast: Euro needs to clear 1.1380 to extend rally

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).