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EUR/USD binary signal - US inflation - 14 June 2017

Signal details
Entry Price: 
1.1250
Close Price: 
1.1218
Direction: 
Low
Expiry Time: 
20:00 GMT
Result: 
ITM
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It is a busy day for the U.S. dollar with the inflation data coming up followed by the FOMC announcement. The U.S. consumer prices data is expected to be released at 1230 GMT. Economists are expecting to see inflation rise 02% on the month while core CPI is expected to rise 0.2%.

Inflation in the U.S. has slowed and more importantly continues to remain below the Fed's target rate of 2%. Although the Fed uses the core PCE as the main measure of inflation, the CPI data is also used to assess the inflationary pressures. A better than expected inflation data could possibly push U.S. rate hike expectations even further.

Later in the day, the FOMC will be releasing the interest rate decision. The U.S. short term interest rates are expected to rise to 1.25%, which is a 25-basis point increase. However, this event (rate hike) is already priced in, so the markets will be looking at what the Fed's forward guidance will be.

There will also be a press release and the FOMC members will be releasing their projections on the GDP, inflation and of course interest rates. In March, the Fed maintained its view that it will hike rates one more time this year (after today's rate hike). This will be important for the markets as it will be keep the bullish momentum going.

The Fed's view on interest rates will be critical for the markets, which are currently expecting the Fed to go easy. There will also be an announcement about the Fed's intentions on reducing its balance sheets.

The obvious currency pair in focus for today's binary trading signal is EURUSD, which is currently trading flat. We look for a near term retracement towards 1.1250 in EURUSD where daily PUT options can be purchased for a 20:00 GMT expiry time. Following the modest retracement to 1.1250, we expect to see EURUSD resume its declines as we expect a lower close to the end of day.

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. He has no business nor personal relationships with any mentioned government entities or stocks. 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.