When is the US inflation data and how will it impact EUR/USD?

By:
on Jan 11, 2023
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  • The EUR/USD price has been in a strong bullish trend recently.
  • The next key catalyst will be the upcoming US inflation data.
  • The numbers will come out on Thursday at 13:30 GMT.

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The EUR/USD exchange rate drifted upwards as focus shifted their focus on the upcoming US inflation data. It was trading at 1.0750, the highest point since June 9 of 2022. The euro has surged by more than 12% from its lowest level in 2022.

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When is the US inflation data?

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The Bureau of Labor Statistics (BLS) will publish the latest American consumer inflation data on Thursday this week. The data will come at 16:30 GMT+ time, which is equivalent to 13:30 London time and 08:30 ET. As a result, the numbers will come at a time when the Asian markets are closed and before the official open of US markets.

Economists expect that the American inflation numbers will show that prices are easing. For one, retailers like Target and Walmart offered substantial discounts in a bid to clear their inventories. Important commodities like natural gas and gasoline also saw their prices drop sharply in December. Shipping costs and used car prices have also pulled back. 

Therefore, economists believe that the headline inflation data will come out at 6.5%, which will be lower than the previous 7.1%. If this happens, it will be the third straight month of decline. At the same time, core inflation, which excludes the volatile food and energy prices, is expected to come in at 5.5%.

US inflation numbers will have an impact on the EUR/USD exchange rate. A higher-than-expected report will push the euro to dollar rate lower because it will give the Fed the impetus it needs to keep hiking rates. 

On the other hand, a lower inflation figure will push the Fed to adjust its interest rate outlook. Besides, as we wrote here, wage inflation has also tilted lower recently.

EUR/USD forecast

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EUR/USD

EUR/USD chart by TradingView

The four-hour chart shows that the EUR/USD price has been in a strong bullish trend in the past few days. In this period, the pair has managed to move above the key resistance level at 1.0717, the highest point on December 30. 

The pair has moved above all moving averages while the Relative Strength Index (RSI) has moved below the overbought level. Therefore, I suspect that the bullish trend will continue as buyers target the next key resistance level at 1.0900. 

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