Will US inflation push USD further up?

Will US inflation push USD further up?

What will happen?

The American inflation rate is announced on Tuesday at 15:30 MT. It’s an important event for traders as it will impact hugely currency pairs with the USD (that is the majority of all pairs on Forex). Inflation rate measures month over month change in the price of goods and services. Last time, inflation increased by 0.4% month-over-month in February of 2021, exactly as expected.

How to trade on US inflation?

It depends on whether the actual numbers exceed the market estimate or not. The forecast should appear a few days before the release in the economic calendar. The better-than-expected inflation rate would mean that the US economy is recovering faster than projected. As a result, the USD will surge. In the opposite scenario, it will fall. Here’s the rule below, but remember that every rule has exceptions sometimes! 

  • If the US inflation rate is greater than the forecasts, the USD will rise.
  • Otherwise – drop.

Instruments to trade: EUR/USD, GBP/USD, AUD/USD, USD/CAD

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