The EURUSD pair shot up after the Bureau of Labor Statistics (BLS) released terrible consumer price data.
US CPI disappoints
According to the BLS, the headline consumer prices dropped by 0.8% in April after dropping by another 0.4% in the previous month. The prices rose by an annualized rate of 0.3%, which was the lowest pace since the past financial crisis. On the other hand, the core CPI, which excludes the volatile food and energy products declined by 0.4% in April. On an annualized basis, the core CPI rose by just 1.4%.
According to the bureau, the main contributor to the sluggish inflation was gasoline, whose prices fell by 20% in the month. Food prices rose by 1.5% in the month while energy prices declined by 10.1%. Other worst performers were apparel, transportation, and services.
Other economic data from the United States has been disappointing. For example, retail sales, mortgage data, housing data, manufacturing and services PMIs and GDP have been disappointing, signaling that the US will undergo its worst economic crisis in decades.
The EURUSD pair spiked after the weak inflation data from the United States. It moved to an intraday high of 1.0860, which is the highest level since yesterday. On the four-hour chart, the price is slightly below the 50% Fibonacci retracement level and is slightly above the 100-day and 50-day EMA. It also formed a hammer pattern earlier today. Therefore, in the near term, there is a possibility that the pair will attempt to test the 50-day EMA at 1.0873.
On the other hand, a move below the day’s low of 1.0782 will mean that there are still sellers in the market, who will be keen to push the EURUSD price lower.