Yesterday’s trade saw EUR/USD within the range of 1.2424-1.2492. The pair closed at 1.2476, gaining 0.30% on a daily basis.
At 8:17 GMT today EUR/USD was down 0.20% for the day to trade at 1.2451. The pair broke the first key daily support and touched a daily low at 1.2427 at 6:05 GMT.
Fundamentals
Euro zone
Italian GDP growth – preliminary estimate
The preliminary estimate of Italys annual Gross Domestic Product probably pointed to a 0.4% contraction in the third quarter of the year, according to the median forecast by experts. In Q2 economy shrank at an annualized pace of 0.2%, according to final data, released on August 29th.
On a quarterly basis, Italian economy probably contracted 0.1% in Q3, following another negative growth rate of 0.2% during the second quarter. In Q2 nations GDP was influenced by a drop in investment activity. Gross fixed capital formation dropped by a seasonally adjusted rate of 0.9%, dragged down by a 1.5% decrease in machinery and equipment and a 0.9% fall in construction investment. Domestic consumption remained unchanged in Q2.
In case a slower-than-projected rate of growth was reported, this would have a negative effect on the single currency. The National Institute of Statistics (Istat) will release the preliminary GDP data at 9:00 GMT.
Euro zone consumer inflation – harmonized
The annualized final consumer price index in the Euro zone, evaluated in accordance with Eurostat’s harmonized methodology, probably confirmed the preliminary inflation estimate for October at 0.4%, according to the median estimate by experts. In September the HICP has been reported at 0.3%, which was in line with the preliminary estimate. According to the preliminary data released on October 31st, the sector of services is expected to show the highest annual rate in October (1.2% compared to 1.1% in September), followed by food, alcohol and tobacco (0.5% compared to 0.3% in September), non-energy industrial goods (-0.1% compared to 0.2% in the preceding month) and energy (-1.8% compared to -2.3% in September).
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 main components of the HICP are food, alcohol and tobacco (accounting for 19% of the total weight), energy (11%), non-energy industrial goods (29%) and services (41%).
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 the latter to achieve price stability and the implementation of monetary policy. The HICP aggregates are calculated as a weighted average of each member state’s HICP components.
In case the HICP accelerated more than anticipated, thus, approaching the 2% inflation objective set by the ECB, this would certainly support demand for the euro, because of the lesser possibility that the bank will introduce additional measures in order to stimulate economic activity.
The annualized final Core HICP for October probably also matched the preliminary estimate, reported at 0.7% on October 31st. In September annualized core inflation was reported at 0.8%. This index excludes volatile categories such as food, energy, alcohol and tobacco. Eurostat is scheduled to release the official inflation data at 10:00 GMT.
Euro zone GDP growth – preliminary estimate
The seasonally adjusted preliminary Gross Domestic Product in the Euro zone probably expanded at an annualized rate of 0.7% during the third quarter, according to expectations, or the same rate as in the second quarter, according to final data reported on September 5th. The GDP represents the total monetary value of all goods and services produced by one nation/region over a specific period of time. What is more, it is the widest indicator of economic activity in the region. The report on GDP holds a lot of weight for traders, operating in the Foreign Exchange Market, because they will look for higher rates of growth as a sign that interest rates will follow the same direction. Higher interest rates will usually attract more investors, willing to purchase assets in the Euro area, while, at the same time, this will increase demand for the common currency. Therefore, in case growth in the single currency zone exceeded expectations, this would heighten the appeal of the euro. Eurostat is expected to release the preliminary GDP report at 10:00 GMT.
United States
Retail Sales
Retail sales in the United States probably increased 0.2% in October on a monthly basis, according to the median forecast by experts. In September retail sales fell 0.3%, which has been the first drop in eight months, as consumers cut their spending at gasoline stations and motor vehicle stores. Retail sales in clothing stores marked the highest drop rate in September, 1.2%, followed by building material and garden equipment dealers (-1.1%) and gasoline stations (-0.8%). Sales of motor vehicles decreased 0.8% in September, after a 1.9% gain in August.
Annualized retail sales climbed 4.3% in September, following a 5.0% gain in August.
The report on retail sales reflects the dollar value of merchandise sold within the retail trade by taking a sampling of companies, operating in the sector of selling physical end products to consumers. The retail sales report encompasses both fixed point-of-sale businesses and non-store retailers, such as mail catalogs and vending machines. US Census Bureau, which is a part of the Department of Commerce, surveys about 5 000 companies of all sizes, from huge retailers such as Wal-Mart to independent small family firms.
US core retail sales, or retail sales ex autos, probably rose 0.2% in October compared to a month ago, following a 0.2% drop in September. This indicator removes large ticket prices and historical seasonality of automobile sales.
The retail sales index is considered as a coincident indicator, thus, it reflects the current state of the economy. It is also considered a pre-inflationary indicator, which investors can use in order to reassess the probability of an interest rate hike or cut by the Federal Reserve Bank. In addition, this indicator provides key information regarding consumer spending trends. Consumer expenditures, on the other hand, account for almost two-thirds of nation’s overall Gross Domestic Product. Therefore, a larger-than-expected increase in sales would certainly boost the US dollar. The official report is due out at 13:30 GMT.
Reuters/Michigan Confidence – preliminary
The monthly survey by Thomson Reuters and the University of Michigan may show that consumer confidence in the United States continued to improve in November. The preliminary reading of the corresponding index, which usually comes out two weeks ahead of the final data, probably rose to 87.5 during the current month from a final value of 86.9 in October. The latter has been the highest index value since July 2007. The survey encompasses about 500 respondents throughout the country. The index is comprised by two major components, a gauge of current conditions and a gauge of expectations. The current conditions index is based on the answers to two standard questions, while the index of expectations is based on three standard questions. All five questions have an equal weight in determining the value of the overall index.
The sub-index of current economic conditions decreased to 98.3 from a preliminary reading of 98.9 in October, after being at 98.9 in September. The sub-index of consumer expectations came in at a reading of 79.6, improving from a preliminary value of 78.4 in October, and also up from 75.4, registered in September.
In case the gauge of consumer sentiment showed a larger improvement than projected, this would boost demand for the greenback. The preliminary reading is due out at 14:55 GMT.
Pivot Points
According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.2464. In case EUR/USD manages to breach the first resistance level at 1.2504, it will probably continue up to test 1.2532. In case the second key resistance is broken, the pair will probably attempt to advance to 1.2572.
If EUR/USD manages to breach the first key support at 1.2436, it will probably continue to slide and test 1.2396. With this second key support broken, the movement to the downside will probably continue to 1.2368.
The mid-Pivot levels for today are as follows: M1 – 1.2382, M2 – 1.2416, M3 – 1.2450, M4 – 1.2484, M5 – 1.2518, M6 – 1.2552.
In weekly terms, the central pivot point is at 1.2463. The three key resistance levels are as follows: R1 – 1.2570, R2 – 1.2685, R3 – 1.2792. The three key support levels are: S1 – 1.2348, S2 – 1.2241, S3 – 1.2126.
TradingPedia.com is a financial media specialized in providing daily news and education covering Forex, equities and commodities. Our academies for traders cover 
