US Dollar Spikes Post Chinese CPI for an Increase of 0.8%10 March, 2015 by Aayush Jindal in Market Analysis
- US dollar continued to gain strength and even stronger than expected Chinese consumer price index failed to lift the risk sentiment.
- Chinese Consumer Price Index was released by the National Bureau of Statistics of China, which posted an increase of 1.2% in February 2015, compared to the preceding month.
- In terms of the annual change the Chinese CPI climbed by 1.4% in February 2015.
- Pairs like AUDUSD and NZDUSD took a hit and traded lower during Asia.
- EURUSD created a new low and fell below the 1.0800 support area.
Earlier during the Asian session, there was an important release lined up in China. The Consumer Price Index was released by the National Bureau of Statistics of China. The forecast was lined up for an increase of 0.8% in February 2015, compared to the preceding month. However, the outcome was above the forecast, as Chinese rose by 1.2%.
When we consider the yearly change, then the Chinese CPI rose by 1.4% in February 2015, compared to the same month a year ago. The outcome was above the forecast of 0.9%, and more than the last gain of 0.8%. Overall, the data was on the positive side, but failed to help the risk-on sentiment in the forex market. The EURUSD pair fell sharply and traded to a new low of 1.0784, and broke the all-important 1.0800 support area.
There were a couple of important support levels formed around the 1.0840-20 area in the EURUSD pair, which were cleared recently. There was a bullish trend line formed on the hourly chart as well, which was broken by the Euro sellers. Currently, the pair is attempting a recovery from the 1.0780 support area. However, it might find resistance around the broken trend line, which is now coinciding with the 50% fib retracement level of the last drop from the 1.0904 high.
If the EURUSD pair moves lower from the current levels, then a retest of the last low of 1.0784 is likely in the near term.
US Wholesale Inventories
Later during the NY session, the US Wholesale Inventories data will be released by the US Census Bureau. The market is not expecting any gain in the inventories in January 2015. Let us see how the outcome unfolds and affects the EURUSD pair.