Forex Market: EUR/CZK trading outlook for Monday

Friday’s trade saw EUR/CZK within the range of 27.7082 – 27.8494. The pair closed at 27.7250, losing 0.37% on a daily and 0.51% on a weekly basis. The cross touched a three-week low of 27.6703 on Wednesday.

Fundamental view

German economic growth

Destatis is expected to report at 06:00 GMT on Monday that the German economy expanded at an annualized 0.8% rate in the second quarter, the lowest rate of growth since Q1 2013. This would match a preliminary reading released on August 14th and trail the preceding three months 2.5% expansion.

Quarter-on-quarter, the leading EU economy is expected to have shrunk by 0.2%, matching the preliminary reading and trailing the first quarters 0.8% growth.

Eurozone factory growth

Spains factory growth probably eased in August, with the Spanish Final Purchasing Managers Index expected to register at 53.1, marking a slowdown from 53.9 in July.

Activity in Italys sector of manufacturing probably expanded in August at a slower rate as well, with the corresponding PMI expected to come in at a reading of 50.8, from 51.9 in May. Values above the key level of 50.0 indicate increased activity. Markit Economics is expected to release the official data at 7:45 GMT on Monday.

Frances final manufacturing PMI probably remained in the zone of contraction this month, confirming the preliminary PMI reading of 46.5, which was reported on August 21st. The official reading is due out at 7:50 GMT. If confirmed, this would be the fourth straight month of contraction.

The final reading of Germanys manufacturing PMI will probably also confirm the preliminary value, with the index coming in at 52.0, down from 52.2 in July. Markit will release the official reading at 7:55 GMT.

The final manufacturing PMI in the Euro zone probably also confirmed the preliminary value of 50.8 released earlier in August, down from 51.8 in July. The official reading is scheduled to be released at 8:00 GMT. The PMI is based on a monthly survey, encompassing a sample of business entities, which represents private sector conditions in terms of new orders, output, employment, prices etc. Higher than expected readings would provide support to the common currency.

Czech Republic

Markit Economics is due to release its report on manufacturing activity growth in the Czech Republic. According to analysts estimates, the nations factory growth probably eased in August, albeit remaining well above the expansion-contraction threshold.

The corresponding Manufacturing PMI is expected to come in at 55.5, compared to 56.5 in July. If confirmed, this would be the sixteenth straight month of manufacturing growth for the Czech Republic.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 27.7609. In case EUR/CZK manages to breach the first resistance level at 27.8135, it will probably continue up to test 27.9021. In case the second key resistance is broken, the pair will probably attempt to advance to 27.9547.

If EUR/CZK manages to breach the first key support at 27.6723, it will probably continue to slide and test 27.6197. With this second key support broken, movement to the downside will probably continue to 27.5311.

The mid-Pivot levels for today are as follows: M1 – 27.5754, M2 – 27.6460, M3 – 27.7166, M4 – 27.7872, M5 – 27.8578, M6 – 27.9284.

In weekly terms, the central pivot point is at 27.7655. The three key resistance levels are as follows: R1 – 27.8606, R2 – 27.9963, R3 – 28.0914. The three key support levels are: S1 – 27.6298, S2 – 27.5347, S3 – 27.3990.