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EUR/USD binary signal - Eurozone flash inflation - 31 May 2017

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Signal details
Entry Price: 
Close Price: 
Expiry Time: 
20:00 GMT
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The eurozone's flash inflation estimates for the month of May will be released today at 0900 GMT. Economists polled are forecasting a decline in consumer prices from the month before. Inflation is therefore expected to rise just 1.5% on the headline and 1.0% on the core. This is down from Aprils' 1.9% and 1.2% respectively.

Most of the gains in the eurozone inflation came from higher oil prices and the Easter holiday spending which briefly pushed prices higher last month. Therefore, the decline in inflation today is unlikely to put much focus on EURUSD. The bias is likely to remain to the upside as a result.

Yesterday, the euro spiked higher after reports emerged that the European Central Bank (ECB) could upgrade its forecasts and come out more hawkish in its language. There was also speculation that the ECB could prepare the groundwork for announcing another taper to its bond purchases by September. The news sent the EURUSD higher on the day.

The ECB is currently purchasing 60 billion euros a month in sovereign bond purchases. It was tapered from 80 billion in March 2017 and the ECB said in the past meetings that the current pace of bond purchases will continue until end of December 2017.

Yesterday, the eurozone's economic confidence took a hit. Data showed that the eurozone's economic confidence fell to 109.2 in May, following a revised 109.7 the month before.

Based on the above factors, today's trade recommendation is to purchase daily CALL options in EURUSD which is likely to turn bullish. The currency pair is also seen trading above the strong support level at 1.1160 – 1.1150. Therefore, purchase daily CALL options in EURUSD at 1.1175 for a 20:00 GMT expiry time. We expect to see the euro potentially close higher as speculation starts to build up on the ECB's tightening.

Disclaimer: The article is written for informative purposes only and it is not financial advice. The author does not have any position in the currency pairs mentioned, and no plans to initiate a position. He wrote the article himself and expressed his own opinions. Readers should not treat any opinion expressed by the author as a specific inducement to make a particular trade or follow a particular strategy, but only as an expression of his opinion. All risks and coasts associated with online trading are your responsibility.