Yesterday’s trade saw EUR/USD within the range of 1.1351-1.1397. The pair closed at 1.1356, down 0.10% on a daily basis, while marking the first loss in the past three trading days. The daily high has been the highest level since September 18th, when the cross registered a high of 1.1460.
At 6:15 GMT today EUR/USD was gaining 0.11% for the day to trade at 1.1373. The pair overshot the upper range breakout level (R4), as it touched a daily high at 1.1388 at 6:05 GMT.
Today the cross may be influenced by a number of macroeconomic reports as listed below.
Fundamentals
Euro area
ZEW Survey – Germany, Eurozone
The gauge of economic sentiment in Germany probably dropped for a seventh month in a row in October to reach 6.0, according to the median forecast by experts. If so, it would be the lowest value since October 2014, when the index was reported at a level of -3.6. In September the index came in at 12.1.
The ZEW (Zentrum für Europäische Wirtschaftsforschung) economic expectations index is reported on a monthly basis. The study encompasses up to 350 financial and economic analysts. The indicator reflects the difference between the share of analysts, that are optimistic and those, that are pessimistic about the expected economic development in Germany over the next six months. A positive value indicates that the proportion of optimists is larger than that of pessimists. A ZEW reading of -100 suggests that all analysts are pessimistic about the current developments and expect economic conditions to deteriorate. A ZEW reading of 100 implies that all analysts are optimistic about the current situation and expect conditions to improve. A ZEW reading of 0 indicates neutrality.
The index of current assessment in Germany probably fell to 64.9 in October, according to market expectations, from 67.5 in September. The latter has been the highest level since April, when a value of 70.2 was reported.
The ZEW Economic Sentiment index for the whole Euro region probably dropped for a second straight month in October to reach a value of 30.1, according to market expectations. If so, this would be the lowest reading since November 2014, when the gauge was reported at 11.0. In September the Economic Sentiment Index stood at 33.3.
In case the German gauge of economic sentiment decreased at a sharper pace than expected, this would have a strong bearish effect on the common currency. The official numbers are scheduled to be released at 9:00 GMT.
United States
Budget Statement
The United States probably recorded a government budget surplus of USD 95.0 billion in September, according to market expectations, after a deficit of USD 64.4 billion during the previous month. The latter represented a 50% decrease compared to August a year ago.
In August total receipts were at USD 211 billion (an 8.8% year-on-year increase), while total outlays amounted to USD 275 billion (a 14.9% year-on-year drop).
Spending for military active duty and retirement, veterans benefits, supplemental security income, and Medicare payments to Health Maintenance Organizations and prescription drug plans were accelerated into July, as August 1st 2015, the normal payment date, fell on a non-business day, according to the report by the US Treasury. The year-to-date budget deficit was at USD 211 billion.
A larger-than-projected budget surplus would have a moderate bullish effect on the greenback. The Financial Management Service is to publish the official figure at 18:00 GMT.
Bond Yield Spread
The yield on German 2-year government bonds went as high as -0.240% on October 12th, or matching the high from the previous two trading days, after which it slid to -0.248% at the close to remain unchanged compared to October 9th.
The yield on US 2-year government bonds climbed as high as 0.641% on October 12th, after which it fell to 0.637% at the close to lose 0.004 percentage point compared to October 9th. It has been the first drop in the past four trading days.
The spread between 2-year US and 2-year German bond yields, which reflects the flow of funds in a short term, shrank to 0.885% on October 12th from 0.889% on October 9th. The October 12th yield spread has been the lowest one since October 7th, when the difference was 0.869%.
Meanwhile, the yield on German 10-year government bonds soared as high as 0.623% on October 12th, after which it slid to 0.580% at the close to depreciate 4.1 basis points (0.041 percentage point) compared to October 9th. It has been the third drop in the past six trading days.
The yield on US 10-year government bonds climbed as high as 2.074% on October 12th, after which it slipped to 2.070% at the close to lose 2 basis points (0.02 percentage point) compared to October 9th, while marking a second consecutive trading day of decline.
The spread between 10-year US and 10-year German bond yields expanded to 1.490% on October 12th from 1.469% on October 9th. The October 12th yield difference has been the largest one since October 8th, when the spread was 1.513%.
Daily and Weekly Pivot Levels
By employing the Camarilla calculation method, the daily pivot levels for EUR/USD are presented as follows:
R1 – 1.1360
R2 – 1.1364
R3 (range resistance) – 1.1369
R4 (range breakout) – 1.1381
S1 – 1.1352
S2 – 1.1348
S3 (range support) – 1.1343
S4 (range breakout) – 1.1331
By using the traditional method of calculation, the weekly pivot levels for EUR/USD are presented as follows:
Central Pivot Point – 1.1306
R1 – 1.1443
R2 – 1.1527
R3 – 1.1664
S1 – 1.1222
S2 – 1.1085
S3 – 1.1001
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