Euro Collapsed Post Disappointing Consumer Price Index

Euro Collapsed Post Disappointing Consumer Price Index

By: Oliver Miller | Where To Trade | On:30-09-2014 14:55
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Key Highlights

  • Chicago Purchasing Managers Index dropped from 64.3 to 60.5 in September 2014.
  • Euro area consumer price index is expected to increase by 0.3% in September 2014, which is 0.1% lower than the previous month.
  • UK Gross Domestic Product managed to register better than expected reading with a gain of 0.9% in the second quarter of this year.
  • Euro area unemployment rate stayed at 11.5% in August as expected by the Forex market.
  • EURUSD collapsed below the 1.2600 support area, and all hopes of a correction vanished with the move.

Chicago PMI

The Chicago Purchasing Managers Index was released by the MNI Deutche Börse Group about an hour ago. The market was expecting it to decline from 64.3 to 62.0. However, the outcome missed the expectation, as the Chicago Purchasing Managers Index registered a decline of around 4 points and currently stands at 60.5. The US dollar was seen losing some ground after the release, as the EURUSD pair managed to climb more than 30 pips. The GBPUSD pair also managed to gain traction and traded back above the 1.6200 level.

Where To Trade - CPMI

The Consumer Confidence was the next release by the Conference Board. The market was expecting a minor rise from 92.4 to 92.5. However, the outcome was again disappointing, as the CB Consumer confidence fell to 86.00 from 92.4. This yet again dented the US dollar, and the Euro got one more boost after the release. However, the EURUSD pair faces a lot of hurdles on the way up, including the 1.2660 swing area.

Euro Area Consumer Prices

The Euro area consumer price index was released by Eurostat earlier during the London session. The outcome was not as expected if we consider core area. The Euro area consumer price index is expected to increase by 0.3% in September 2014, which means a decline of 0.1% expected from August increase of 0.4%. The disappointing part was the core consumer price index, which is expected to increase by 0.7%, down from 0.9% in August. So, this might definitely increase pressure on the ECB, and justifies their recent action.  

There was another important release lined up during the London session i.e. the UK Gross Domestic Product data which was released by the National Statistics. The outcome was a bit better than expected, as the UK GDP registered a rate of 0.9% in the second quarter of this year, which is 0.1% more than the market expected. However, there was a revision for the last reading, which now stands at 0.7%. The GBPUSD pair reacted to the downside, as the market sentiment broadly favored gains in the US dollar. Basically, after the release of the Euro area consumer price index, the US dollar started surging across the board. The Euro was one of the worst performers during the London session.

The next support area for the EURUSD pair is seen around the 1.2550 level. On the upside, the previous support of 1.2660 level might act as a hurdle moving ahead. 

Oliver Miller

Oliver Miller

"Patience is the key for success"

Oliver Miller is one of the best financial analyst with 18 years of online trading experience

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