A major risk event is coming up for the US on Tuesday ahead of the Federal Reserve’s interest rate meeting on Wednesday. Although US CPI data is unlikely to change the Fed’s mind for Wednesday it will certainly set the mood and tone.
If you look at the reaction of the EURUSD around the last 5 years you can see that on average the EURUSD falls in the 2 days after the CPI print. So, if the US CPI print comes in much higher than the market is expecting look out for USD strength and EURUSD selling. The EURUSD pair has fallen on average over 60% of the time in the 2 days after this event over the last 5 years.
The major trade risk here is if the CPI data is really weak. In this case we would typically expect EURUSD prices to move sharply higher.
Remember don’t just trade it, Seasonax it!