EURUSD moves higher ahead of US CPI data
The EURUSD is trading higher ahead of the US CPI data. The headline CPI is expected at unchanged for the month and +0.3% for the core.
The gains in the EURUSD today were supported by better-than-expected ZEW sentiment data released today. The EU sentiment came in at 23.0 vs 13.3 estimate. German ZEW came in at 12.8 vs 9.6 estimate.
Technically, the buying was encouraged by holding the 100-day MA at the lows of the day at 1.07573 in the early Asian session (the low for the day reached 1.0760) and the breaking of the 100-hour MA (blue line in the chart above) at 1.0773.
The high price has reached at the next target. A swing level near 1.08038 has helped stall the rally so far. A move above that level would have traders targeting the falling 200-hour MA at 1.08156 and above that the 200-day MA at 1.08252. Getting above those levels (lower USD on weaker US CPI most likely needed) would give the buyers more confidence and have traders probing higher with the 38.2% of the move down from the November high at 1.08352 another required target needed to be broken to increase the bullish bias.
Should CPI come in higher than expected, the 100-hour MA at 1.0773 would be targeted followed by the 100 day MA at 1.07573 (retracing the gains seen today). Below that, and the low from yesterday (and a swing low from Friday) at 1.07404, and the low from last week at 1.0723 would be eyed.
With the CPI and inflation in general being dissected closely by traders, little differences from the expectations carry more weight to the general bias (USD higher or lower). A weaker number sends the greenback lower, stocks higher, yields lower. A stronger number and the bias would expected to be the opposite. The technical levels for the currency outlined above, provide the roadmap for support and resistance on the momentum runs. Move above/below a level and it not only spurs momentum toward the next target, but can also be a support/resistance level at broken levels.