The EURUSD saw an increase in volatility yesterday when it dropped 118 pips, or 1.03%, to go from its high yesterday at 1.13906 to close at 1.12723. As mentioned previously we had been expecting volatility to pick up again as the market for this pair had been trading in a fairly tight range over several trading sessions.
Yesterday also saw the release of Retail Sales data for the US and although it was lower than expected at 0.2%, the Euro saw no relief and price continued to fall 30 minutes after the number. There are renewed fears of how fast the Federal Reserve may hike interest rates, and any signs of higher inflation in the US can only weigh on the likeliness of hikes happening at a faster rate.
Today we saw Consumer Price Index (CPI) released for the Euro area which was 0.0%, last month’s number was at minus 0.1%.CPI is a metric for gauging inflation and both policy makers and traders watch this number closely. The markets don’t seem to have given this small increase in CPI any weight as EURUSD price continues to trade relatively flat to pre-data release.
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