EUR/USD Forecast – Euro Spikes After CPI Miss

EUR/USD Forecast Video for 14.12.22

Euro vs US Dollar Technical Analysis

The Euro has rallied on Tuesday during the early hours, breaking above the 1.06 level. It has had even more momentum after the CPI numbers came out at 0.1% month over month in the United States, which is much less than the 0.3% expected. The year-over-year number was 7.1%, as opposed to the 7.3% number. Core CPI month over month came in at 0.2%, instead of 0.3% expected.

Because of this, traders initially started to bet on the Federal Reserve being a bit more dovish, as inflation is starting to move in the correct direction. However, it should be noted that the Federal Reserve has a meeting on Wednesday, followed by an ECB meeting on Thursday. This might be a short-term rally more than anything else, because of the noise that comes out of those 2 central bank meetings. With that in mind, it guzzled bullish in the short term, but that could change in the blink of an eye, so caution is going to be the better part of valor.

Suspiciously, the market started rallying into the number a few hours ahead of time, suggesting that perhaps the number may have been leaked. (Yes, this happens.) That being said, as I write this article, I just watch the Euro spikes 30 pips, only to give up another 20 on the way back down. In other words, there is going to be a lot of volatility, but I think over the next 12 hours or so it’s likely that the Euro will be favored until people start to focus on Jerome Powell again. There is a very high likelihood that he will try to talk the market back down as far as risk appetite is concerned.

For a look at all of today’s economic events, check out our economic calendar.