German Prelim CPI
Earlier today, the Destatis released the month over month Prelim Consumer Price Index (CPI) of Germnay, which increased by 0.3% against a forecast of 0.2%. The Prelim Consumer Price Index (CPI) measures the changes in the price of goods and services that German consumers purchased during the past month. Since consumer prices usually account for the majority of the overall inflation level in an economy, an increasing CPI figure indicates inflation.
As Germany is one of the most influential economic power in the Eurozone, analysts consider this to be one of the most significant fundamental data that affects the value of the EUR/USD.
Currently, the European Central Bank (ECB) concerns regarding the deflating price level and an increasing inflation in Germany will provide ample support for the ECB to take hawkish monetary policy measures in the future. Hence, better than expected German Prelim CPI was considered an Euro positive news by traders.
US ADP Non-Farm Employment Change
During the afternoon, at GMT 12:15 p.m., the Automatic Data Processing, Inc. (ADP) released its version of the US Non-Farm Employment Change figure that came out at only 218,000 against the forecast of 234,000. The employment change figure estimates the changes in the number of employed people during the previous month in the US economy.
Automatic Data Processing, Inc., a private company based in the US, provides payroll services to various corporations in the country. Hence, they have access to around employment data from around 400,000 consumers. They use their internal data to forecast employment growth estimates in the economy. Therefore, analysts consider this to be a leading economic indicator of the US economy.
Worse than expected employment change data from ADP made the market speculate regarding further intervention from the Federal Reserve in terms of economic stimulus. Hence, this negative data was perceived by the market participants as US Dollar positive.
Trade Recommendation for the EUR/USD
Prior to today, the EUR/USD has been trending down. So far, worse than expected US ADP Non-Farm Employment Change and better than expected German Prelim CPI figures pushed the EUR/USD around 45 points during the day. Unless the EUR/USD closes above resistance level around 1.3405, the market will remain bearish regarding the pair. It suggests a potential PUT in the EUR/USD.
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