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EUR/USD binary signal - U.S. Inflation - 12 Jan 2018

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Signal details
Entry Price: 
Close Price: 
No Trade
Expiry Time: 
21:00 GMT
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The economic calendar today will be focusing on the U.S. consumer price index data. The economic data will certainly find keen interest from the markets following the Fed's decision to hike interest rates in December. At the December FOMC meeting, Fed officials were hopeful that inflation will start to rise on the back of tighter labor market as well as the tax reforms that could put more spending money in the hands of consumers.

The inflation data, which is due to be released at 13:30 GMT today is expected to show that headline consumer prices increased just 0.1% on the month in December. This follows November's increase of 0.4%. Core CPI is forecast to rise 0.2%, slightly better than the 0.1% increase seen in November.

On a year over year basis, headline CPI is expected to rise 2.1%, down from 2.2% previously and core CPI is expected to remain stable at 1.7%. The forecasts are somewhat dovish which increases the risks of a better than expected inflation report.

Alongside the inflation data, retail sales figures for December will also be released. Headline retail sales are forecast to rise at a slower pace of 0.5% on the month, down from 0.8% increase seen previously. Core retail sales excluding auto sales are forecast to rise 0.4%, slower than the 1.0% increase seen previously.

The economic release today could potentially start to shape the expectations from the Fed in the coming months. The next major FOMC meeting is scheduled in March. However, with the change of the leadership, the U.S. short term interest rates are expected to remain unchanged.

This leaves the Fed with just enough room to hike rates three times during the next three quarters. A weaker than expected inflation data could possibly dent the sentiment. However, with the Fed looking to the PCE price index data rather than the CPI, today's economic data might not have much of an impact as expected.

Based on the above, today's binary options signal is EURUSD. The currency pair gains strongly yesterday but we expect this retracement to be short lived. Therefore, we would purchase daily PUT options at 1.2040 for a 21:00 GMT expiry time. We expect the EURUSD to retrace the gains and eventually close lower on the day.

binary options signal eurusd 12 Jan 2018

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.