Forex Market: EUR/USD daily trading outlook

Yesterday’s trade saw EUR/USD within the range of 1.1171 – 1.1033 to close 0.91% lower at 1.1037.

At 07:25 GMT today EUR/USD was up 0.03% for the day to trade at 1.1056. The pair held in a daily range of 1.1033 – 1.1086 and is down 1% for the week so far following a 1.7% drop last week.

Fundamentals

Eurozone

The number of unemployed people in Spain decreased by 94 700 in June, data by the Ministry of Employment and Social Security showed at 07:00 GMT, following a drop of 118 000 in May. This, however, trailed analysts median projections for a decline of 124 000 unemployed people. A decrease implies that consumer spending may pick up, with the latter being tightly related to economic growth. An increase suggests the opposite and is therefore deemed bearish for the common currency.

A report later in the day is expected to show that the annualized index of producer prices in the Eurozone (PPI) probably fell to -2.0% in May, according to market expectations, following a deflation of -2.2% in April. If so, this would be the highest reading since November 2014 when a drop to -1.6% was reported. In monthly terms, producer prices probably edged up 0.1% in May after dropping at the same pace during the previous month.

The Producer Price Index measures changes in prices of goods and services either as they leave the production process, or as they enter it. Unlike the CPI, which measures price changes from the consumers perspective, the PPI basically gauges the prices received by domestic producers for their output, or the prices paid by domestic producers for their intermediate inputs. The PPI performance may be an early signal for inflationary pressure in the economy as higher prices are transferred down the chain towards the end consumer. Generally speaking, a higher-than-expected PPI reading should be considered as having a bullish effect on the common currency, as it suggests accelerated consumer inflation, while a lower-than-expected result would have a bearish effect. Eurostat will release its PPI data at 09:00 GMT.

United States

Employers in all sectors of the US economy, excluding the farming industry, probably added 230 000 new jobs in June, according to the median forecast by experts, after a better-than-expected jobs increase of 280 000 in May.

Job gains were seen in professional and business services in May, as well as leisure and hospitality, and health care, while mining employment continued to decline. Marchs nonfarm employment change was revised from +85 000 to +119 000, while Aprils reading was corrected down from +223 000 to +221 000

The nonfarm payrolls report presents the total number of US employees in any business, excluding the following four groups: farm employees, general government employees, employees of non-profit organizations, private household employees. The reading typically varies between 10 000 and as much as 250 000 – 300 000 at times when the economy is performing well. Despite the volatility and the possibility of large revisions, the nonfarm payrolls indicator presents the most timely and comprehensive reflection of the current economic state. Total nonfarm payrolls account for 80% of the workers, who produce the entire Gross Domestic Product of the United States. In case of a lesser-than-expected gain in jobs, the US dollar would certainly see selling pressure.

Average Hourly Earnings probably increased 0.2% in June on a monthly basis after a 0.3% jump in May, which was a fifth straight monthly gain. Average weekly hours probably remained unchanged at 34.5.

Meanwhile, the rate of unemployment in the country probably inched back down to 5.4% last month, the lowest in seven years, after it rose to 5.5% in May, its first increase in four months, as more people joined the labor force.

The unemployment rate represents the percentage of the eligible work force that is unemployed, but is actively seeking employment. A person who is not classified as employed or unemployed is excluded from the statistics. One counts as unemployed, if they fall in all of the following categories: they were unemployed during the last week; they were able bodied; they have been seeking employment for a period of at least four weeks, which end during the week when the research is conducted. People who have been laid off and are awaiting to be hired again are also classified as unemployed. In case the unemployment rate met expectations or even fell further, this would have a bullish effect on the greenback because of the positive implications for consumer spending. The Bureau of Labor Statistics will release the official employment data at 12:30 GMT.

Factory orders

Also due today, data by the Census Bureau will likely show that factory orders in the United States contracted by 0.5% in May from a month earlier, following another 0.4% decline in April. In March, factory orders edged up 2.2%, which was the biggest increase since August 2014. Excluding the sector of transportation, factory orders were unchanged in April.

This indicator presents the total value of new purchase orders placed at manufacturers for durable and non-durable goods, and can provide insight into inflation and growth in the US manufacturing sector. In case new orders slid more than anticipated, this would have a bearish effect on the greenback. The official data is due out at 14:00 GMT.

Pivot points

According to Binary Tribune’s daily analysis, the pair’s central pivot point stands at 1.1080. In case it penetrates the first resistance level at 1.1128, it will encounter next resistance at 1.1218. If breached, upside movement may attempt to advance to 1.1266.

If the cross drops below its S1 level at 1.0990, it will next see support at 1.0942. If the second key support zone is breached, downward movement may extend to 1.0852.

In weekly terms, the central pivot point is at 1.1236. The three key resistance levels are as follows: R1 – 1.1342, R2 – 1.1519, R3 – 1.1625. The three key support levels are: S1 – 1.1059, S2 – 1.0953, S3 – 1.0776.