Forex Market: EUR/USD daily trading forecast

During Friday’s trading session EUR/USD traded within the range of 1.3297 – 1.3221 and closed at 1.3240, losing 0.29% on a daily and 1.20% on a weekly basis.

At 11:35 GMT today EUR/USD was losing 0.33% for the day to trade at 1.3196. The pair held in a daily range between 1.3184, the lowest since September 9th 2013, and 1.3297.

Fundamental view

United States

A preliminary gauge prepared by Markit Economics is expected to show later today that activity in the US services sector probably slowed down in August, with the corresponding preliminary Purchasing Managers’ Index coming in at a reading of 59.5, according to the median forecast by analysts. In July, the PMI stood at 60.8. The index is based on a monthly survey, encompassing 400 business entities, operating in the services sector. Respondents give their estimate in regard to business conditions – sales, employment, inventories, prices. Values above the key level of 50.0 indicate optimism (expanding activity). As services comprise a dominant part of nation’s GDP, the performance of this indicator is of key importance for overall economic development assessment. Higher PMI readings would support the national currency. The preliminary data by Markit Economics is due out at 13:45 GMT on Monday.

Sales of new single-family houses in the United States probably reached the seasonally adjusted annualized level of 430 000 in July, following a level of 406 000 units in June, while the latter was 8.1% lower compared to that in May. The median sales price of new houses sold in June was $273 500, while the average sales price was $331 400. The seasonally adjusted estimate of new houses for sale at the end of June was 197 000, which represents a supply of 5.8 months at the current rate of sales.

The report on new home sales has a considerable impact on the financial markets, as new home sales can trigger a rise in consumption. It is also an excellent indicator of any economic downturns or upturns due to the sensitivity of consumer income. For example, when new home sales drop over several months, this usually is a precursor to an economic depression.

A higher-than-expected rate of increase in the new home sales index is usually dollar positive. The Census Bureau is scheduled to publish the official data at 14:00 GMT on Monday.

Germany, Spain

CESifo Group released its Business Climate Index today at 8:00 GMT, as well as its Current Assessment and Business Expectations indicators. The latter two are sub-indexes of the Business Climate Index. The Current Assessment gauges current business conditions in Germany, without taking into account future projections, while the Business Expectations index rates anticipations for the next six months.

The IFO Current Assessment index registered at a worse-than-expected 111.1 in August from 112.9 in July, while the IFO Expectations index fell to 101.7 from 103.4 a month earlier. The composite Business Climate Index slid to 106.3, the lowest in 13 months, from 108.0 in July, trailing projections for a drop to 107.0.

Logically, among the three, the general Business Climate index has most weight, being eyed as an early indicator of current conditions and future expectations altogether. Prepared by CESifo Group, it is compiled from surveys conducted among 7 000 enterprises regarding their business assessment and short-term planning. A rise in the readings, and especially better-than-expected values, are seen as bullish for the euro and vice versa.

In Spain, producer prices declined by an annualized 0.4% in July, Instituto Nacional de Estadistica reported, compared to a 0.4% jump a month earlier. The producer price index measures the average changes in prices of goods sold by manufacturers. It is a precursor to fluctuations in consumer inflation, which accounts for most of the overall inflation.

A higher reading, especially outstripping projections, is generally seen as positive for the euro, and vice versa.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.3253. In case EUR/USD manages to breach the first resistance level at 1.3284, it will probably continue up to test 1.3329. In case the second key resistance is broken, the pair will probably attempt to advance to 1.3360.

If EUR/USD manages to breach the first key support at 1.3208, it will probably continue to slide and test 1.3177. With this second key support broken, the movement to the downside will probably continue to 1.3132.

The mid-Pivot levels for today are as follows: M1 – 1.3155, M2 – 1.3193, M3 – 1.3231, M4 – 1.3269, M5 – 1.3307, M6 – 1.3345.

In weekly terms, the central pivot point is at 1.3287. The three key resistance levels are as follows: R1 – 1.3353, R2 – 1.3466, R3 – 1.3532. The three key support levels are: S1 – 1.3174, S2 – 1.3108, S3 – 1.2995.