EUR/USD remains above 1.0500 despite CPI

Note: This section contains information in English only.
Source: Dukascopy Bank SA


On Wednesday, the United States Labour Statistics Bureau released the monthly US Consumer Price Index and Core Consumer Price Index data for April. The markets expected the data for clues in regards to the effectiveness of the first US Federal Reserve Rate hike done on March 15. At 12:30 GMT, the CPI and Core CPI came in at 0.3% and 0.6% instead of market forecast 0.2% and 0.4%. The event caused a surge of the US Dollar and drop of all assets traded against it, as it revealed the current Fed policy had failed to decrease inflation.

The EUR/USD reacted to the news with an immediate drop of almost 50 base points or 0.45%. Meanwhile, on a larger scale, the rate remained above the 1.0500 mark and the recent low level zone below it.

In regards to the near term future, previous forecasts remain intact, as despite the increased volatility during the CPI, by 13:30 GMT, the currency pair had not revealed its direction.

If the pair declines, the 1.0500 is expected to act as support, before the last week's low level zone at 1.0472/1.0492 is reached. In addition, take into account the weekly simple pivot point at 1.0471. Further below, the weekly S2 simple pivot point is located at 1.0397 and strengthens the 1.0400 level.

On the other hand, a recovery of the Euro against the USD would have to pass the 1.0580 level and the 1.0600 mark, before approaching the post-Federal Reserve rate hike high level zone at 1.0626/1.0642 and the weekly R1 simple pivot point. Meanwhile, note that the pair was ignoring the 50, 100 and 200-hour simple moving averages and the weekly simple pivot point at 1.0535/1.0557
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