Forex Market: EUR/USD daily forecast

During Friday’s trading session EUR/USD traded within the range of 1.3610-1.3651 and closed at 1.3650.

At 8:26 GMT today EUR/USD was gaining 0.01% for the day to trade at 1.3652. The pair touched a daily high at 1.3660 at 7:43 GMT.

Fundamental view

Euro zone

The annualized preliminary consumer price index in the Euro zone, evaluated in accordance with Eurostat’s harmonized methodology, probably accelerated to 0.6% in June, according to the median forecast by experts. In May the annualized final HICP stood at 0.5%, as reported on June 16th. The index shows the change in price levels of a basket of goods and services from consumer’s perspective and also reflects purchasing trends. The HICP is used to evaluate and compare inflation rates between Member States, according to Art . 121 of the Amsterdam’s Agreement and directives by the European Central Bank (ECB), in order to achieve price stability and the implementation of monetary policy. In case the HICP increased more than anticipated, thus, approaching the 2% inflation objective set by the ECB, this would support demand for the euro, because of the greater possibility of an interest rate hike. Eurostat is scheduled to release the official data at 9:00 GMT.

In addition, the annualized preliminary consumer price index in Italy probably fell to 0.3% in June, after a month ago the final CPI stood at 0.5%. Nations annualized preliminary CPI for June, evaluated in accordance with the harmonized methodology, probably matched the final HICP estimate of 0.4% in May, which was reported on June 13th. The National Institute of Statistics is to release the official CPI report at 9:00 GMT.

United States

The Chicago Purchasing Managers Index (PMI) probably slowed down to a reading of 63.0 in June from 65.5 during the prior month. The index reflects business conditions in regions manufacturing sector and is interrelated with the Manufacturing Index, published by the Institute for Supply Management (ISM). A reading above the key level of 50.0 is indicative of expansion in manufacturing activity. In case the PMI exceeded forecasts, this would heighten the appeal of the US dollar. The MNI Deutche Börse Group will release the official reading of the Chicago barometer at 13:45 GMT.

The index of pending home sales in the United States probably surged 1.2% during May compared to April, according to the median estimate by experts, following another 0.4% increase in April compared to March.

When a sales contract is accepted for a property, it is recorded as a pending home sale. As an indicator the index provides information on the number of future home sales, which are in the pipeline. It gathers data from real estate agents and brokers at the point of a sale of contract and is currently the most accurate indicator regarding US housing sector. It samples over 20% of the market. In addition, over 80% of pending house sales are converted to actual home sales within 2 or 3 months. Therefore, this index has a predictive value about actual home sales.

Although there are some cancellations, there are not enough for the data to be skewed one way or another. The base value of the index is equal to 100, while the base year is 2001, when there has been a high level of home sales. The National Association of Realtor’s (NAR) will release the official index value at 14:00 GMT. In case pending home sales increased more than anticipated, this would have a bullish effect on the greenback.

Technical view

According to Binary Tribune’s daily analysis, in case EUR/USD manages to breach the first resistance level at 1.3664, it will probably continue up to test 1.3678. In case the second key resistance is broken, the pair will probably attempt to advance to 1.3705.

If EUR/USD manages to breach the first key support at 1.3623, it will probably continue to slide and test 1.3596. With this second key support broken, the movement to the downside will probably continue to 1.3582.