CPI and EUR/USD reaction: Heading towards 1.1000

FXStreet (Cocoa) - The Euro is trading down against the US Dollar as investors are buying the USD following the US Consumer Price Index CPI data. After falling 175 pips in the American morning, the EUR/USD is now testing 1.1030, looking for 1.1000.

As reported, US CPI rose 0.1% in April; but it is down 0.2% YoY; it's lowest level since 2009. However, more important Core CPI data, Ex-energy and food; CPI advanced 0.3% in April; posting a +1.8% YoY that means it remains at highs of the last year. A higher CPI make the case for a Fed hike.

Good news for USD bulls

According to Adam Button from ForexLive, today's CIP data was "more evidence the US dollar doesn't need much of an excuse to rally." Button also said: "When a market rallies that easily on a number that barely beats expectations, it's a sign of overwhelming underlying demand. It's very good news for US dollar bulls."

Currently, EUR/USD is trading at 1.1033, down 0.77% on the day, having posted a daily high at 1.1209 and low at 1.1026. The hourly FXStreet OB/OS Index is showing neutral conditions, alongside the FXStreet Trend Index which is slightly bearish.

EUR/USD levels

If the pair extends declines below 1.1000, it will find supports at 1.0960, 1.0930 and 1.0900. To the upside, 1.1080, 1.1100 and 1.1140.