Trade the Euro on US CPI and Fed Meeting

Foreign Exchange currency traders are gearing up for a big day on Wednesday, 12 June 2024, as they prepare for two key updates on the US economy coming back-to-back within a few hours. Last week’s jobs report on Friday really upset the market, which was looking for another weak employment print to reinforce expectations for a swifter easing cycle from the Fed. Instead, those expectations have been pushed back, and the dollar has rallied strongly.

The Euro, in particular, has taken a beating against the greenback, losing nearly 1.7% in the last couple of days. The stronger dollar move on Friday and Euro weakness on Monday, after a snap election call in France, combined to knock it down from lofty levels not seen since late March. It is now sitting near good technical levels that will make it a favorite for traders to target if we get volatility tomorrow on the CPI data or Fed meeting – or most likely on both.

It is now sitting just 50 pips off strong long-term trendline support on the daily charts. A higher CPI print than expected or a hawkish Fed and Fed dot-plot could see it sink into fresh downside ranges. However, if we see another turn in the dollar’s prospects – and it has been very volatile lately – then we could see those multi-month highs challenged again in short order, with most traders agreeing that volatility is almost guaranteed in the sessions ahead.

CPI data is expected to show a 0.3% monthly increase for the Core number and a 0.1% monthly increase for the headline figure, with the year-on-year data coming in steady at 3.4%. Anything significantly off from this should see moves in the greenback. Of course, this data is then followed up by the conclusion of the latest Fed meeting, and with ‘no change’ firmly expected, traders will be analyzing all that the Fed has to say. We are expecting to see moves across the board in the aftermath of the update from Jerome Powell and his team.

Technical Levels on the Euro Daily Chart

Resistance 2: 1.0980 – 2024 High

Resistance 1: 1.0945 – Trendline Resistance

Support 1: 1.0710 – Trendline Support

Support 2: 1.0599 – 2024 Low