Release of the US CPI report for April is a key event of the day. Inflation report will be released at 1:30 pm BST and is expected to show a deceleration in headline and core price growth on a year-over-year basis. Expected deceleration can be, at least to some extent, reasoned with a more favorable base effect from a year ago. Major banks, like Societe Generale or ING, think that peak in consumer price growth may have been reached last month at 8.5%. However, those banks also think that a return to 2% Fed goal will not be quick and will take time. As current CPI levels are still very high, it is expected that the Fed will still deliver 50 basis point rate hikes in June, July and September.
1:30 pm BST – US, CPI inflation for April.
- Headline. Expected: 8.1% YoY. Previous: 8.5% YoY
- Core. Expected: 6.0% YoY. Previous: 6.5% YoY
Release is likely to have an impact on the USD market. Taking a look at EURUSD chat at H1 interval, we can see that the main currency pair has been locked in a sideways move for over two weeks now. Moves of the pair have been largely confined to a 1.0490-1.0570 trading range. Pair pulled back from the upper limit of the range yesterday and tested 1.0530 swing area. However, bears were unable to break below and buyers took over. Pair recovered part of yesterday’s drop, broke back above 50- and 200-hour moving averages, and is now looking towards another test of the upper limit of the range.