Forex Market: EUR/CZK daily trading forecast

Yesterday’s trade saw EUR/CZK within the range of 27.5460-27.6450. The pair closed at 27.6135, losing 0.09% on a daily basis.

At 6:16 GMT today EUR/CZK was up 0.01% for the day to trade at 27.6045. The pair touched a daily high at 27.6073 during early Asian trade.

Fundamental view

Euro zone

Spanish consumer inflation

Spain’s final annualized index of consumer prices (CPI) probably fell to -0.5% in August, confirming the preliminary CPI reading, reported on August 28th. In July the annualized CPI was at -0.34%. If confirmed, Augusts drop in consumer prices would be the most considerable since October 2009. According to provisional estimates, lower prices of fuel and lubricants contributed the drop in consumer prices last month.

Key categories, included in Spans CPI, are food and non-alcoholic beverages (accounting for 20% of the total weight) and transport (15%). Other categories are real estate (12%), hotels, coffee and restaurants (11.5%), clothing and footwear (9%) and entertainment and culture (7.5%). Health, communication, education and other goods and services comprise the remaining 25% of the index.

The CPI measures the change in price levels of the abovementioned basket of goods and services from consumer’s perspective and also provides clues over purchasing trends. In case the CPI dropped more than projected, this would have a bearish effect on the euro. The National Statistics Institute (INE) will release its official report at 7:00 GMT.

Spanish final annualized CPI, evaluated in accordance with Eurostat’s harmonized methodology, probably also matched the preliminary CPI estimate of -0.5% in August, which was released on August 28th.

Italian consumer inflation

Italys final annualized index of consumer prices (CPI) probably fell to -0.1% in August, matching the preliminary CPI, reported on August 29th. If so, this would be the first time in 55 years, when Italian consumer inflation entered negative territory. According to provisional estimates, the drop in consumer prices is mostly driven by lower prices of non-regulated energy products, which fell 1.2%, as well as due to a slowdown in costs of services in the country. In July the annualized CPI was at 0.1%.

Key categories, included in Italys Consumer Price Index, are food and non-alcoholic beverages (accounting for 16% of total weight), transport (15%), restaurants and hotels (11%) and housing, water, electricity and other fuels (10%). Other categories are clothing and footwear (9%), furnishing and household equipment (8%), recreation and culture (8%) and health (also 8%). Communication, education, alcoholic beverages, tobacco and other goods and services comprise the remaining 15% of the index.

Nations final annualized CPI, evaluated in accordance with the harmonized methodology, probably matched the preliminary HICP estimate of -0.2% in August, which was released on August 29th. The National Institute of Statistics (ISTAT) is to release the official CPI report at 9:00 GMT.

Euro zones industrial output

The seasonally adjusted index of industrial production in the Euro zone probably expanded 0.5% in July compared to a month ago, following a 0.3% drop in June. Annualized output probably increased at a pace of 1.3% in July, after a flat performance in June and a 0.5% expansion in May, with the latter being the lowest annual rate of increase since September 2013. The index, reflecting business cycle, measures the change in overall inflation-adjusted value of output in sectors such as manufacturing, mining and utilities. In case industrial output expanded more than anticipated, this would support demand for the single currency. Eurostat is to publish the official data at 9:00 GMT.

Czech Republic

At 9:00 GMT Eurostat is to report on industrial production in the Czech Republic for July. In June compared to May output increased 0.1%, following a 1.5% drop in May compared to April. In case of expansion, the local currency would be supported.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 27.6015. In case EUR/CZK manages to breach the first resistance level at 27.6570, it will probably continue up to test 27.7005. In case the second key resistance is broken, the pair will probably attempt to advance to 27.7560.

If EUR/CZK manages to breach the first key support at 27.5580, it will probably continue to slide and test 27.5025. With this second key support broken, the movement to the downside will probably continue to 27.4590.

The mid-Pivot levels for today are as follows: M1 – 27.4808, M2 – 27.5303, M3 – 27.5798, M4 – 27.6293, M5 – 27.6788, M6 – 27.7283.

In weekly terms, the central pivot point is at 27.6478. The three key resistance levels are as follows: R1 – 27.7737, R2 – 27.9398, R3 – 28.0657. The three key support levels are: S1 – 27.4817, S2 – 27.3558, S3 – 27.1897.