The US Dollar has been under heavy pressure over the last few months. In the last few days though, the Buck has found some support, albeit not against the safe haven currencies such as JPY.
This could be just a retrace before the next move higher seeing as we have also seen deeper retraces during these months. On the other hand, we´ve come way too far, especially the EUR/USD pair. So, there´s an increasing consensus that the USD will reverse back up soon while EUR/USD will reverse back down. That´s the reason that EUR/USD has been getting more attention recently.
Today we are expecting the US CPI (consumer price index) numbers, which might finally give the Dollar some direction.
Yesterday we saw the USD lose 70-80 pips after the PPI (producer price index) missed expectations. That number rarely moves the market. The move yesterday proves that the market is clueless at the moment anis tryings try to make something out of smaller data releases.
This means that today´s CPI number is likely to have a bigger impact on the USD if we see it deviate 2 or more points from the consensus, for a reading of 0.2% for both headline and core inflation number.
If inflation numbers, particularly core inflation, come at 0.4% or above, then the USD will probably reverse. Selling EUR/USD after the release would offer a good win/loss ratio.