The forex market is bracing for this week’s US Consumer Price Index (CPI) and Producer Price Index (PPI) numbers.
But how should you be preparing, and what might we expect from some of your favorite pairs?
Check out today’s video for the details, including the latest on the US Dollar Index (DXY).
This week’s US CPI and PPI numbers are sure to trigger volatility in the forex market and beyond, but what’s the best way to prepare?
First, know that we have US CPI on Thursday and PPI on Friday.
Between the two, CPI is typically the more volatile-inducing event, but both are worthy of your event calendar.
Second, it’s important to understand that trading ahead of market-moving events like these is always ill-advised.
Even if you nail the direction, the volatility alone will cause spreads to widen, which can often mean a premature stop out.
As for the DXY, there isn’t much in terms of support until 104.70, which is the December 2023 trend line.
The recent loss of 105.50 doesn’t look good for US dollar bulls, but the price action since April points to more consolidation than anything else.
The EURUSD and GBPUSD, on the other hand, saw marginal breaks of their 2021 trend lines last week.
We’re seeing these pairs hold above those areas, although GBPUSD is doing a better job of that as of now.
For EURUSD, the 1.0815 region is the one that bulls need to hold this week, and 1.2770 is the area to hold for GBPUSD.
As always, these initial breakouts could fail, but the DXY would need to reclaim 105.50 for the US dollar to turn bullish again.
Regardless of where these markets go from here, this week’s US inflation data will surely play an important role.
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