Forex Market: EUR/USD daily trading outlook

Friday’s trade saw EUR/USD within the range of 1.0801-1.0936. The pair closed at 1.0932, dipping 0.04% on a daily basis. It has been the third drop in the past five trading days. In weekly terms, EUR/USD added 0.66% last week, following a 1.07% slump during the week ended on January 3rd. The pair has advanced 0.55% so far in the current month.

At 7:47 GMT today EUR/USD was losing 0.25% for the day to trade at 1.0899. The pair touched a daily low at 1.0895 at 7:49 GMT, testing the range support level (S3). Support may be received at the hourly 55-period EMA (1.0879) and then – in the area around the low from January 8th (1.0801). Resistance may be encountered within the 1.0965-1.0985 area, where the pair faced resistance on several occasions in the past month.

Today EUR/USD trading may be influenced by one macroeconomic report as listed below.

Fundamentals

Euro area

Sentix Investor Confidence

Confidence among investors in the Euro zone was probably lower in January, with the corresponding index coming in at a reading of 12.2, according to market expectations. If so, January would be the 13th consecutive month, during which the gauge occupied positive territory. In December the barometer stood at 15.7. The index is based on results from the SENTIX survey, one of the most prominent surveys, reflecting investors’ opinion in Germany. It encompasses 2 800 respondents, with 510 of them being institutional investors. Respondents present their expectations regarding ten different markets for a period of one and six months. Readings above zero indicate that respondents were predominantly optimistic, while readings below zero show pessimism. Lower-than-expected readings would have a limited bearish effect on the common currency. The official index value is due out at 9:30 GMT.

Correlation with other Majors

Taking into account the week ended on January 10th and the daily closing levels of the major currency pairs, we come to the following conclusions in regard to the strength of relationship:

EUR/USD to USD/CAD (0.7073, or strong)
EUR/USD to GBP/USD (-0.6211, or strong)
EUR/USD to NZD/USD (-0.6322, or strong)
EUR/USD to AUD/USD (-0.7602, or strong)
EUR/USD to USD/JPY (-0.7815, or strong)
EUR/USD to USD/CHF (-0.9941, or very strong)

1. During the examined period EUR/USD moved almost equally in the opposite direction compared to USD/CHF. The correlation between the two pairs was almost perfect.

2. EUR/USD moved strongly in the opposite direction compared to GBP/USD, NZD/USD, AUD/USD and USD/JPY during the past week.

3. EUR/USD moved strongly in one and the same direction with USD/CAD during the period in question.

Daily and Weekly Pivot Levels

By employing the Camarilla calculation method, the daily pivot levels for EUR/USD are presented as follows:

R1 – 1.0944
R2 – 1.0957
R3 (range resistance) – 1.0969
R4 (range breakout) – 1.1006

S1 – 1.0920
S2 – 1.0907
S3 (range support) – 1.0895
S4 (range breakout) – 1.0858

By using the traditional method of calculation, the weekly pivot levels for EUR/USD are presented as follows:

Central Pivot Point – 1.0863
R1 – 1.1018
R2 – 1.1103
R3 – 1.1258

S1 – 1.0778
S2 – 1.0623
S3 – 1.0538