empty
13.01.2025 06:24 AM
EUR/USD: Inflation, Inflation, and More Inflation

This week is crucial for EUR/USD traders, as key U.S. inflation data will be released shortly. These reports will not only influence the outcome of January's Federal Reserve meeting—an event that is largely anticipated—but will also impact the March meeting. Strong Non-Farm Payroll data from last Friday suggests that the Fed may adopt a wait-and-see approach in March. However, there is still a degree of uncertainty in the market. According to the CME FedWatch tool, the probability of a pause in January is 95%, but the likelihood of a pause in March stands at only 58%. Inflation reports could sway the decision towards maintaining the current stance, but only if the data meets forecasts or falls within the "green zone."

This image is no longer relevant

Tuesday, January 14: Producer Price Index (PPI)

The U.S. Producer Price Index (PPI), which has shown an upward trend recently, is set to be published. Forecasts indicate that this trend will continue to favor the dollar bulls. The headline PPI for December is anticipated to rise to 3.1% year-over-year, marking the highest level since March 2023. On a monthly basis, the index is projected to increase by 0.5%, following the upward trajectory observed in October and November, which suggests a solid trend.

The core PPI, which has remained stable at 3.4% year-over-year for the past two months, is expected to hold steady at that level in December.

Wednesday, January 15: Consumer Price Index (CPI)

The key macroeconomic report of the week, the CPI, is set to be released. Preliminary forecasts indicate that the headline CPI will rise by 0.4% month-over-month, which would be the highest increase since March 2024, and by 2.9% year-over-year, the highest since July 2024. The CPI has been showing upward trends for two consecutive months (October and November), and December is projected to continue this trend.

The core CPI, which has remained steady at 3.3% for the past three months, is expected to either rise to 3.4% or stay the same, according to analysts.

The preliminary inflation forecasts are disappointing for the Federal Reserve. If the CPI and PPI come in at the predicted levels—let alone within the "green zone"—the dollar will likely experience significant support. In this scenario, the expected date for the first interest rate cut in 2025 could be pushed back to at least May.

However, the economic calendar for the upcoming week includes more than just these two reports. These releases are the most critical as they will influence trading across all dollar pairs, including EUR/USD. We will also highlight other significant currency pairs for traders.

Monday

At the beginning of the trading week, it's important to pay attention to news from China, particularly regarding the release of foreign trade indicators.

During the American trading session, the monthly report on the execution of the US budget will be released. This report outlines the difference between budget revenues and government expenditures. While it serves as a macroeconomic indicator, it is typically considered secondary and often overlooked by the market.

Tuesday

On this day, the previously mentioned PPI index will be released, and it is the most significant economic indicator to be published on Tuesday.

During the American session, the RealClearMarkets/TIPP Economic Optimism Index will also be released. However, this index will primarily impact the currency pair only if there is a significant deviation from the forecast level. A slight increase is expected, rising from 54.0 to 55.1. Nevertheless, this report will likely remain overshadowed by the PPI, which is expected to provoke volatility in the markets.

Additionally, on Tuesday, John Williams, the head of the New York Fed, is scheduled to speak. His comments may touch upon the upcoming December Nonfarm Payrolls and the producer price index, as the inflation report will be available before his speech. During his last public statement in December, he mentioned that the central bank would consider another rate cut when the risks to inflation and employment become more balanced. If he adopts a more hawkish stance and raises doubts about the feasibility of monetary easing in the near future, the dollar may receive additional support.

Wednesday

The CPI report will be released on Wednesday, making it the central event of the day. On the same day, the Fed will also publish its monthly economic survey by region, known as the Beige Book. Additionally, the Empire Manufacturing Index, which gauges the economic health of the manufacturing sector in New York State, will be released. After a minimal increase of 0.2 in December, a decline to -0.3 is expected for this report. For context, the indicator rose to 31 points in November.

Furthermore, several Fed officials will speak on Wednesday, including Thomas Barkin, Neel Kashkari, Austan Goolsbee, and John Williams.

Thursday

The minutes from the December meeting of the European Central Bank (ECB) will be released. During this meeting, the ECB cut interest rates by 25 basis points and indicated that further cuts may follow. If the minutes reveal that ECB members are mainly focused on the weakness of the European economy rather than on rising inflation, it could create additional downward pressure on the euro.

In the American session, data regarding the weekly growth of initial unemployment claims will be published. Last week, this figure dropped to 201,000, marking the lowest level since January 2024. Forecasts predict an increase to 210,000 by the end of next week. However, if the number unexpectedly falls below the 200,000 mark, the dollar may strengthen significantly. This potential drop could have both psychological effects and reinforce a downward trend, as it would indicate a decrease for the fourth consecutive week.

An important release on Thursday is the US Retail Sales Report. Total retail sales are expected to increase by 0.6%, following a 0.7% increase in the previous month. When excluding transportation, an increase of 0.5% is anticipated, compared to a 0.2% rise in the previous month.

Additionally, another inflation indicator, the import price index, will be published on Thursday. While this is a secondary indicator, it can still provide valuable context. In December, it is expected to show an upward trend, increasing by 1.4% year-over-year, following a 1.3% rise in November and a 0.6% increase in October.

Another important release on Thursday is the Philadelphia Fed Business Activity Index. This indicator has been negative for the past two months, reaching -16 points in December. Positive dynamics are anticipated for January, with expectations of a rise to -7.0. However, the release will only bolster the dollar if it unexpectedly moves out of the negative zone.

Friday

On Friday during the Asian session, important data regarding China's economic growth for the fourth quarter of 2024 will be released. It's worth noting that in the third quarter, China's GDP grew by 4.6%, falling short of the government's target of 5%. Forecasts suggest that the GDP will still hover around the 5% mark in the fourth quarter. If the report comes in below expectations, the dollar may gain support as a safe-haven asset amid increasing anti-risk sentiment.

During the American session on Friday, the US will publish data on the volume of construction permits issued, with further growth expected to reach 7.4%. Additionally, data on industrial production will be released, with expectations for the indicator to rise out of the negative zone to approximately 0.3%.

Conclusions

This will be a busy and volatile week. If U.S. inflation accelerates and Fed members adopt a more hawkish tone, EUR/USD sellers could push the pair deeper into the 1.0X range, bringing parity within reach.

The current fundamental backdrop supports further downside for EUR/USD. Even if CPI and PPI meet expectations, corrective pullbacks remain opportunities to open short positions, targeting 1.0230 (lower Bollinger Band on the D1 timeframe) and 1.0170 (lower Bollinger Band on the W1 timeframe).

Seleccione el marco de tiempo
5
min
15
min
30
min
1
hora
4
horas
1
día
1
s.
Gana con los cambios en el valor de las criptomonedas con InstaForex.
Descarga MetaTrader 4 y abre tu primera operación.
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    UNIRSE AL CONCURSO

Recommended Stories

Los mercados comienzan a prepararse para la reunión de política monetaria de la Fed (es probable que el Bitcoin y el #SPX bajen correctivamente)

La festiva semana de investidura de D. Trump resultó pobre para la publicación de datos económicos importantes, por lo que toda la atención de los actores del mercado se centra

Pati Gani 09:31 2025-01-23 UTC+2

Análisis del par GBP/USD. El 23 de enero. La libra esterlina sube y ya está sobrecomprada.

El par de divisas GBP/USD también continuó el miércoles con un débil movimiento alcista, para el que no había razones específicas y locales. No hubo publicaciones macroeconómicas ni eventos fundamentales

Paolo Greco 09:01 2025-01-23 UTC+2

Análisis del par EUR/USD. El 23 de enero. Prometer no significa cumplir.

El par de divisas EUR/USD se negoció con mucha moderación y calma el miércoles, tal y como se esperaba. De hecho, no se observaron movimientos interesantes durante la jornada, pero

Paolo Greco 09:01 2025-01-23 UTC+2

Últimos acontecimientos en el mercado del gas

Ayer, los precios del gas, tras un leve incremento durante la sesión europea, retrocedieron a los mínimos del 14 de enero. Las declaraciones del presidente de Rusia, Vladímir Putin, sobre

Miroslaw Bawulski 11:43 2025-01-22 UTC+2

Análisis del par GBP/USD. El 22 de enero. La libra esterlina no disfrutó de la vida durante mucho tiempo.

El par de divisas GBP/USD comenzó a caer el martes, al igual que el par EUR/USD. Recordemos que ayer advertimos de tal desenlace, porque no había razones para

Paolo Greco 08:41 2025-01-22 UTC+2

Análisis del par EUR/USD. El 22 de enero. Hemos vivido cuatro años muy aburridos sin Trump.

Tal y como se esperaba, el par de divisas EUR/USD recuperó el martes el terreno perdido el lunes. Recordemos que el lunes, el dólar estadounidense cayó en picado. Naturalmente, esta

Paolo Greco 08:41 2025-01-22 UTC+2

Últimos acontecimientos en el mercado del gas

El mercado del gas reaccionó con un aumento tras la noticia de que el nuevo presidente de los Estados Unidos, Donald Trump, declaró un estado de emergencia en la industria

Miroslaw Bawulski 09:32 2025-01-21 UTC+2

Analisis del par GBP/USD. El 21 de enero. La libra continua agarrandose a un clavo ardiendo.

El par de divisas GBP/USD tambien mostro una subida el lunes, que comenzó exactamente con la apertura de la sesión estadounidense. ¿Vale la pena decir que este crecimiento no estuvo

Paolo Greco 09:02 2025-01-21 UTC+2

Análisis del par EUR/USD. El 21 de enero. La toma de posesion de Trump no cambia nada.

El par de divisas EUR/USD continuó negociandose con mucha calma el lunes. Al menos en la primera mitad del día. Con la apertura de la sesión estadounidense, la volatilidad subió

Paolo Greco 09:02 2025-01-21 UTC+2

EUR/USD. Previsión semanal. Inauguración de Trump, discurso de Lagarde, índices ZEW y PMI

La inauguración de Trump y sus primeras decisiones como presidente de Estados Unidos serán el tema principal de la próxima semana. A pesar de ello, el calendario económico para

Irina Manzenko 05:39 2025-01-20 UTC+2
¿No puede hablar ahora mismo?
Ingrese su pregunta en el chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.