The EUR/USD is giving back the gains it made following the release of the NFP (U.S. jobs report). The pair is currently trading at 1.1437, losing ground against the dollar. The market is holding its breath ahead of the release of the U.S. CPI (Consumer Price Index). A classic scenario ahead of an inflation figure 📊
🔍 What’s happening?
The EUR/USD pair has gradually given up the gains it had accumulated following the release of U.S. employment data. At the time of writing, it’s trading at 1.1437, a sign that traders are readjusting their positions ahead of the next wave of macroeconomic data.
Market attention has shifted to the U.S. CPI, expected in the coming days. This inflation figure will set the tone for the Fed’s monetary policy and, consequently, for the direction of the dollar. Traders are choosing to lighten their risky positions rather than be caught off guard.
💡 Why does this matter?
The U.S. CPI is the key figure for the Fed. Higher-than-expected inflation could delay the rate cuts the market is anticipating. Conversely, lower inflation would open the door to faster monetary easing. The dollar reacts directly to these expectations.
For EUR/USD traders, it’s simple. If the CPI comes in hot, the dollar regains strength and the pair plunges. If the CPI disappoints, the euro resumes its upward trend. In the meantime, the market is consolidating and shaking off the excess volatility following the NFP release.
📊 Our Take
We’re in a typical wait-and-see phase ahead of a major data release. The market has digested the NFP; now it wants concrete evidence on inflation.
Our analysis suggests that the U.S. CPI will come in slightly below expectations. Disinflation is underway in the United States, even if it’s slow. Energy prices are stable, supply chains have normalized, and U.S. consumer spending is beginning to slow under the weight of high interest rates. If this scenario plays out, the EUR/USD will resume its march toward 1.15 in the coming weeks. In Europe, the ECB remains cautious but could also ease policy if European inflation continues to decline. For French traders, now is the time to monitor support levels around 1.14. Below that, the outlook turns bearish in the short term.
We’re betting on a euro rebound after the CPI release if the figures confirm disinflation. Long position on EUR/USD with a target of 1.15 and a stop below 1.14.
✅ Key Takeaway
- EUR/USD erases its NFP gains and returns to 1.1437
- The market is awaiting the U.S. CPI for the next move
- A weak CPI would support a rebound in the euro
What do you think? Do you think the CPI will come in above or below expectations, and how are you trading EUR/USD this week?
🔎 See also
To learn more, check out all our Forex analyses on ActuTrading Forex 📈
Source: Financial Press
