Global macro overview for 18/11/2016:
According to the US Labor Department, the Consumer Price Index advanced more than a month ago. Market participants expected CPI to increase to 0.4% m/m and 1.6% y/y, which was more than last month reading of 0.3% m/e and 1.5% y/y. The CPI at the level of 1.6% means it is the largest annual increase since October 2014. Another CPI sub-index, Core CPI, which excludes prices for volatile items like energy and food, stayed unchanged at the level of 0.1%, while market participants expected an increase to 0.2%. In conclusion, higher inflation and good situation on the US jobs market will encourage the FED to hike the interest rate in December. Currently, the CME Group FedWatch Tool is pricing the probability of the rate increase at 90.6%.
Let's now take a look at the EUR/USD technical picture in the 4H time frame. The growing bullish divergence between the price and the momentum oscillator suggests a corrective relief rally to occur soon. The next resistance is seen at the level of 1.0666 and the local support is seen at the level of 1.0580.
