- Summary:
- The US CPI figures came in slightly better than expected, producing a modest uptick on the EURUSD, even as the Fed decision is expected later today.
The EURUSD has bounced off intraday lows as the US CPI figure came in at 0.3%, which was better than the expected figure of 0.2%. However, this was still a tad off the previous figure of 0.4%. The Core CPI came in at 0.2%, which was in line with expectations.
The deviation target of 0.2% was not met, which is why the response on the EURUSD to this news release has been muted.
Outlook for EURUSD
The EURUSD had hit intraday lows of 1.10704 before the upbeat CPI figure was released. It is now trading 14 pips higher, but upside remains limited at the central pivot mark. Emphasis now shifts to the FOMC decision which is expected to take place at 7pm GMT, with the rate statement expected to occur 30 minutes later. The Fed Funds Rate is expected to be held at <1.75%. However, the rate statement may provide some clues as to the policy direction of the Fed going into 2020.
The central pivot mark of 1.1087 remains the immediate resistance to price action, even though the highs for today correspond to the intraday resistance marked by the central pivot of Dec 6. A break above the central pivot targets today’s highs at 1.1087, with potential for attaining 1.1106 (R2 pivot and this week’s highest price levels). Beyond this level, near-term resistance may also be seen at 1.1118.
On the flip side, price rejection either at the central pivot or the intraday high, could lead to a retest of 1.1065. Below this area, intraday support could be seen at 1.1053 (S2 pivot) or 1.1020 (S3 pivot), in that order.