Forex Market: USD/BGN daily trading forecast

Yesterday’s trade saw USD/BGN within the range of 1.5326-1.5459. The pair closed at 1.5338, losing 0.87% on a daily basis.

At 7:37 GMT today USD/BGN was up 0.46% for the day to trade at 1.5407. The pair touched a daily high at 1.5411 at 7:17 GMT.

Fundamental view

United States

The United States probably recorded a government budget surplus of 82.3 billion USD in September, according to market expectations, after a deficit of 128.71 billion USD during the previous month. The latter was a 13% smaller deficit figure compared to the same month a year earlier. The year-to-date deficit was at the amount of 589 billion USD at the end of August, or the lowest figure in six years. In August receipts increased to 194 billion USD, or an increase by 5% year-on-year, while the outlays dropped 3% to reach 323 billion USD. A wider than projected surplus would have a bullish effect on the greenback. The Financial Management Service, US Treasury is to release the official figure at 18:00 GMT.

Bulgaria

Consumer inflation

Bulgarian annualized index of consumer prices (CPI) probably continued to improve, reaching -0.2% in September, according to expectations, from -0.6% in August. Nations consumer inflation hit an all-time low at -2.60% in February this year. The index measures the change in price levels of a basket of goods and services from consumer’s perspective and also reflects purchasing trends. In case consumer inflation improved more than anticipated, this would provide support to the lev. The National Statistical Institute is to release the official CPI report at 8:00 GMT.

Current Account

The surplus on nations current account probably shrank to 343.1 million EUR in August from 594.3 million EUR in July, as the latter has been the largest surplus since the record high figure, recorded in August 2013 (852.1 million EUR).

The current account reflects the difference between a nation’s savings and its investments. It is the sum of the balance of trade, net current transfers (cash transfers) and net income from abroad (earnings from investments made abroad plus money sent by individuals working abroad to their families back home, minus payments made to foreign investors).

A current account surplus indicates that a country’s net foreign assets have increased by the respective amount, while a deficit suggests the opposite. A country with a surplus on its current account is considered as a net lender to the rest of the world, while a current account deficit puts it in the position of a net borrower. A net lender is consuming less than it is producing, which means it is saving and those savings are being invested abroad, or foreign assets are created. A net borrower is consuming more than it is producing, which means that other countries are lending it their savings, or foreign liabilities are created. Therefore, a contracting surplus or a widening deficit on the current account of a nation usually has a bearish effect on its currency.

The Bulgarian National Bank is expected to release the official data at 9:00 GMT.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.5374. In case USD/BGN manages to breach the first resistance level at 1.5423, it will probably continue up to test 1.5507. In case the second key resistance is broken, the pair will probably attempt to advance to 1.5556.

If USD/BGN manages to breach the first key support at 1.5290, it will probably continue to slide and test 1.5241. With this second key support broken, the movement to the downside will probably continue to 1.5157.

The mid-Pivot levels for today are as follows: M1 – 1.5199, M2 – 1.5266, M3 – 1.5332, M4 – 1.5399, M5 – 1.5465, M6 – 1.5532.

In weekly terms, the central pivot point is at 1.5469. The three key resistance levels are as follows: R1 – 1.5650, R2 – 1.5811, R3 – 1.5992. The three key support levels are: S1 – 1.5308, S2 – 1.5127, S3 – 1.4966.