EURUSD prices have witnessed minor pullbacks after creating an intraday high yesterday at $1.4890. The bulls were quick to take profits as they await the outcome of two essential data to be released today, which will have so much impact on the EURUSD. The price is currently ranging at $1.04550 during the Asian session today. The recent pullback is further supported by the price surge in the dollar index (DXY), which rose rapidly to 104.91 during the Asian session. Nonetheless, the outcome of the Consumer Price Index (CPI) flash estimate and ISM Manufacturing PMI to be released today will show the way for both EURUSD and DXY. We have explained these two data and their expected impacts on EURUSD below.
Two major factors to influence EURUSD today
- CPI Flash Estimate (EUROZONE): The CPI flash report provides estimated data on the change in the prices of goods and services offered to consumers. This data is fundamental, as it is often used to measure the overall Euro inflation rate. The forecast for this data is 8.5%, while the previous record was 8.1%. Higher reading from this means rising inflation which will discount the Euro, amounting to a further decline in EURUSD. In comparison, a lower reading implies a decrease in prices of goods which is a sign of falling inflation and suitable for the EURO. This will trigger a rally in EURUSD.
- ISM Manufacturing PMI (USA): A critical report often released by the Institute for Supply Management (ISM), which provides an index of the diffusion rate of the purchasing power for all the Purchasing Managers in the manufacturing industry. This data is vital in determining the economic health of the country. Thus, a higher purchase by the Purchasing Managers shows a growing economy while a decline shows a falling economy. The forecast for this data is 54.6, while the previous record was 56.1. Higher reading will definitely increase the dollar strength, which will result in a massive pullback in EURUSD. On the contrary, lower reading from this data will favour EURUSD.
GER30 Bears dominate as price falls to 2-month low
The German Index (GER30) too witnessed a massive pullback with prices falling so low, nearing a two-month low at 12638. The price is currently at 12641.20 during the Asian session today. Investors were forced to sell after a shift in the German unemployment rate was released yesterday. The difference reported was a staggering 133K, contrary to the forecast of -5K, which is also the previous record for this data. Analysts predict further growth for this index, with the target at 12641.00. However, judging from the lower time frames, the Ger30 seems to be showing some signs of recovery from the present point. Investors are eagerly awaiting the outcome of the Consumer Price Index Flash (Eurozone) to be released today to determine the next direction for this index.
Forecast for EURUSD
EURUSD is currently in a ranging market, whereby positive results from today’s CPI would push the price higher to the upper resistance at $1.05170. On the contrary, should the results come out lower, we might see a retest of the lower support at $1.04382.
