Forex Market: EUR/CZK daily trading forecast

Yesterday’s trade saw EUR/CZK within the range of 27.4290-27.5530. The pair closed at 27.4990, losing 0.13% on a daily basis.

At 7:00 GMT today EUR/CZK was up 0.04% for the day to trade at 27.5034. The pair touched a daily high at 27.5126 during early Asian trade.

Fundamental view

Euro zone

Manufacturing PMI data by Markit

Activity in Italys sector of manufacturing probably remained in the zone of contraction in September, with the corresponding PMI coming in at a reading of 49.5, as expected by experts, from 49.8 in August. The PMI has been decreasing since April. Values below the key level of 50.0 indicate pessimistic outlook (contracting activity). Markit Economics is expected to release the official data at 7:45 GMT.

Frances final manufacturing PMI probably confirmed the preliminary reading for September, reported at 48.8 on September 23rd. If so, this would be the fifth consecutive month, during which the index stays in the zone of contraction, after in March and April the PMI climbed above 50.0. The official reading is due out at 7:50 GMT.

The final reading of German manufacturing PMI probably confirmed the preliminary value for September, with the index coming in at 50.3. In August it stood at 51.4. The index has been falling gradually since January. Markit will release the official reading at 7:55 GMT.

The final manufacturing PMI in the Euro zone probably also confirmed the preliminary value in September, with the index remaining at 50.5. In August it came in at 50.7, or the lowest reading since October 2013. The official value 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. Lower than expected readings would mount selling pressure on the common currency.

Disappointing inflation data

Annualized consumer inflation in the Euro zone continued to fall in September, distancing further from the 2% inflation objective, set by the European Central Bank, which provides price stability. The preliminary Harmonized Index of Consumer Prices (HICP) dropped to the annual level of 0.3% in September, which has been the lowest since October 2009, from 0.4% in August. This drop in inflation pressure may be another obstacle for the central bank, after in early September the latter introduced a series of measures, aimed to spur growth in the Euro area. It may still be quite early for these measures to take effect, but, however, sliding inflation rate poses a threat of reducing, to an extent, this effect. Consumer inflation has remained below 1% for the past 12 months.

Following the release of the official report by Eurostat yesterday, EUR/USD plunged 0.67% to reach a daily low at 1.2602, which has also been the pairs lowest level since September 6th 2012. Later in the day the pair extended losses, tumbling to 1.2571.

Czech Republic

Manufacturing activity in the Czech Republic probably continued to decline in September, with the respective Purchasing Managers Index falling to 53.8 from 54.3 in August. Augusts reading has been the lowest since September 2013. Values above the key level of 50.0 are indicative of optimism regarding sector development. PMI reports are of huge importance for analysts and fundamental traders, because company executives have an early access to data, regarding their companys performance. Their opinion, on the other hand, may provide clues over economic trend in the whole sector and, respectively, over the entire macroeconomic environment. Lower than anticipated PMI readings would have a bearish effect on the local currency. The official data is due out at 7:30 GMT.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 27.4937. In case EUR/CZK manages to breach the first resistance level at 27.5583, it will probably continue up to test 27.6177. In case the second key resistance is broken, the pair will probably attempt to advance to 27.6823.

If EUR/CZK manages to breach the first key support at 27.4343, it will probably continue to slide and test 27.3697. With this second key support broken, the movement to the downside will probably continue to 27.3103.

The mid-Pivot levels for today are as follows: M1 – 27.3400, M2 – 27.4020, M3 – 27.4640, M4 – 27.5260, M5 – 27.5880, M6 – 27.6500.

In weekly terms, the central pivot point is at 27.5253. The three key resistance levels are as follows: R1 – 27.6067, R2 – 27.6813, R3 – 27.7627. The three key support levels are: S1 – 27.4507, S2 – 27.3693, S3 – 27.2947.