On Wednesday at 13:30 UK time, the US CPI print will be released. The headline is expected to fall to 3.1% from 4% prior & a reading below 2.9% would likely weaken the USD. The core reading is also expected to fall to 5% from 5.3% prior, and a reading below 4.9% should also weaken the USD. The print that should boost the USD would be if both, the headline and the core, come in above the market’s maximum expectations.

However, there is also the possibility that if the CPI prints come in low the market might choose to focus on concerns surrounding falling US earnings which could ultimately boost the USD. So, it is quite a complicated picture.

From an event perspective, the EURUSD has fallen nearly 60% of the time out of CPI prints over the last 10 years. So, perhaps a high print could boost the USD higher and weaken the EURUSD?

Major Trade Risks: The biggest risk here is to do with the market reaction to an out-of-consensus print. Also, note that previous reactions to market events are not guaranteed to happen again.

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