Forex Market: EUR/USD daily forecast

During yesterday’s trading session EUR/USD traded within the range of 1.3521-1.3572 and closed at 1.3528.

At 6:31 GMT today EUR/USD was losing 0.01% for the day to trade at 1.3524. The pair touched a daily low at 1.3521 at 5:55 GMT.

Fundamental view

Euro zone

The annualized final consumer price index in the Euro zone, evaluated in accordance with Eurostat’s harmonized methodology, probably remained unchanged at 0.5% in June, matching the preliminary estimate reported on June 30. In May the annualized final HICP also 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.

United States

The number of people in the United States, who filed for unemployment assistance for the first time during the week ended on July 12th, probably increased to 310 000 from 304 000 during the prior week. This is a short-term indicator, reflecting lay-offs in the country. In case the number of initial jobless claims dropped more than projected, this would have a bullish effect on the greenback. The Department of Labor is to release the weekly report at 12:30 GMT.

In addition, building permits probably increased to an annualized pace of 1.048 million units last month from 1.005 million in May, that was higher than initially reported. Housing statistics are calculated based on issued building permits, including those of local authorities. Not all regions of the country require building permits. The statistics reflects only those in which it is required. Ongoing studies related to construction only cover the percentage of work undertaken on the basis of permits. The majority of the data for the reporting period is not available at the time of publication and therefore does not provide statistical data for actually started construction works for the observed period.

Moreover, housing starts in the US probably declined to an annualized pace of 1.020 million units in June from 1.001 million units in the previous month, according to the median estimate of experts. As a start of construction is considered the beginning of construction works, excavation or development of the foundations of the building. The construction of houses, is considered to be initiated at the beginning of the excavation. The index started in 1992 and covers the whole territory of the country, regardless whether construction permits are needed.

The US Census Bureau, part of the US Department of Commerce, is expected to release its official data at 12:30 GMT today. Higher-than-expected readings can be seen as signs of improving housing market conditions and will certainly provide support for the greenback.

Last, but not least, the Philadelphia FED Manufacturing Index probably fell to 15.0 in July from 17.8 in the previous month, that was the strongest since October 2013. The index is based on a monthly business survey, measuring the manufacturing activity in the third district of the Federal Reserve, Philadelphia. Participants indicate the direction of business changes in overall economic activity and different indicators of activity in their company: employment, working hours, new and existing orders, deliveries, inventories, delivery time, price. The survey is conducted every month since May 1968.

The results are presented as the difference between the percentages of positive and negative forecasts. A level above zero is indicative of improving conditions, while a level below zero is indicative of worsening conditions.

The Federal Reserve Bank of Philadelphia is expected to release the official results from its monthly survey at 14:00 GMT. A higher than expected reading will certainly provide a boost to the US dollar.

Technical view

According to Binary Tribune’s daily analysis, in case EUR/USD manages to breach the first resistance level at 1.3560, it will probably continue up to test 1.3591. In case the second key resistance is broken, the pair will probably attempt to advance to 1.3611.

If EUR/USD manages to breach the first key support at 1.3509, it will probably continue to slide and test 1.3489. With this second key support broken, the movement to the downside will probably continue to 1.3458.