Forex Market: EUR/USD daily trading strategy

During yesterday’s trading session EUR/USD traded within the range of 1.3367-1.3416 and closed at 1.3395.

At 6:12 GMT today EUR/USD was losing 0.01% for the day to trade at 1.3395. The pair touched a daily low at 1.3393 at 4:40 GMT.

Fundamental view

Euro zone

The number of jobless people in Germany, the largest Euro zone economy, probably decreased by 5 000 in July, according to the median estimate by experts, after the number of unemployed Germans unexpectedly climbed by 9 000 in in June. A greater than projected drop would have a bullish effect on the single currency. In addition, the unemployment rate in the country probably remained unchanged at 6.7% in July. Lower-than-expected reading would have a bullish effect on the euro. The Federal Statistical Office is expected to release the official rate at 7:55 GMT.

The jobless rate in the Euro zone as a whole probably remained steady at 11.6% in June. The official rate is due to be released at 9:00 GMT by Eurostat. Lower than expected unemployment rate would be supportive for the euro.

At the same time, the annualized preliminary Harmonized Index of Consumer Prices (HICP) in the Euro zone, probably remained unchanged at 0.5% in July (matching the weakest reading since October 2009), according to the median forecast by experts. In June the annualized final HICP also stood at 0.5%, just quarter of the ECB target of just under 2%. The index shows the change in price levels of a basket of goods and services from consumer’s perspective and also reflects purchasing trends. The HICP is used to evaluate and compare inflation rates between Member States, according to Art. 121 of the Amsterdam’s Agreement and directives by the European Central Bank (ECB), in order to achieve price stability and the implementation of monetary policy. In case the HICP increases, thus, approaching the 2% inflation objective set by the ECB, this would support demand for the euro. Eurostat is scheduled to release the official data at 9:00 GMT.

In addition, the annualized preliminary consumer price index in Italy probably remained steady at 0.3% in July. Nation’s annualized preliminary CPI for the same month, evaluated in accordance with the harmonized methodology, probably matched the final HICP estimate of 0.2% in June, which was reported on July 15th. The National Institute of Statistics is to release the official CPI report at 9:00 GMT.

United States

The initial jobless claims in the US probably rose to 300 000 in the week ended July 26th, according to the median estimate by experts, from 284 000 a week ago, that was the weakest level in eight years.

The indicator measures the number of applications for unemployment benefits that are recorded each week in a report prepared by the Bureau of Labor Statistics in the United States. Initial application or (Initial Claim) means a completed document from an unemployed person before the local government, which is considered a claim for compensation or the possibility of compensation. The completion of the initial claim marks the beginning of a period in which the applicant receives unemployment benefits. The survey covers the number of applications registered in the previous week and is an important indicator concerning the health of the US labor market.

The statistical arm of the US Department of Labor will release an official report at 12:30 GMT today. If jobless claims rose less than expected, this will provide support for the US dollar.

The Chicago Purchasing Managers Index (PMI) probably improved to a reading of 63.1 in July from 62.6 during the prior month. The index reflects business conditions in region’s manufacturing sector and is interrelated with the Manufacturing Index, published by the Institute for Supply Management (ISM). A reading above the key level of 50.0 is indicative of expansion in manufacturing activity. In case the PMI exceeded forecasts, this would heighten the appeal of the US dollar. The MNI Deutche Börse Group will release the official reading of the Chicago barometer at 13:45 GMT.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.3393. In case EUR/USD manages to breach the first resistance level at 1.3418, it will probably continue up to test 1.3442. In case the second key resistance is broken, the pair will probably attempt to advance to 1.3467.

If EUR/USD manages to breach the first key support at 1.3369, it will probably continue to slide and test 1.3344. With this second key support broken, the movement to the downside will probably continue to 1.3320.

In weekly terms, the central pivot point is at 1.3467. The three key resistance levels are as follows: R1 – 1.3512, R2 – 1.3595, R3 – 1.3640. The three key support levels are: S1 – 1.3384, S2 – 1.3339, S3 – 1.3256.