EUR/USD: Strong US inflation data to open the door for a test of 0.95 – Credit Suisse

The focus is on the release of the US September Consumer Price Index (CPI). Economists at Credit Suisse expect the EUR/USD pair to test the 0.95 mark on strong inflation figures.

EUR/USD could test parity on soft data

“We can see core inflation print in line with what our economists expect taking this pricing somewhat closer to yet another 75 bps hike, and that leaves open the possibility of still more greenback strength. On the other hand, a ‘soft’ core number such as 0.2% MoM or below would arguably play well for another risk short squeeze and USD sell-off given that the market could respond to this by shifting in favour of only a 50 bps rate hike in November.”

“In EUR/USD terms, we see strong US inflation data opening the door for a move to test 0.9500 on the way to our Q4 range low expectation of 0.9200, while soft data risk another move to test parity and our strategic ‘sell zone’ in the 1.0000-1.0200 range.” 

See – US CPI Preview: Forecasts from 10 major banks, price pressure easing only very slowly