Yesterdays trade saw EUR/USD within the range of 1.0855-1.1052. The daily high has also been the highest level since March 5th, when a high of 1.1116 was recorded. The pair closed at 1.0884, down 0.80% on a daily basis, or marking a second loss in the past four trading days.
At 8:58 GMT today EUR/USD was down 0.51% for the day to trade at 1.0828. The pair broke the first key daily support and touched a daily low at 1.0801 at 8:15 GMT.
Fundamentals
Euro Area
Italian Industrial orders
At 9:00 GMT Italy’s National Institute of Statistics is expected to release a report on industrial new orders in January. The annualized new orders (without a seasonal adjustment) increased 5.8% in December, following six months of declines. In monthly terms, the indicator registered a 4.5% increase in December after a 0.8% drop in the prior month. It measures the change in value of new orders, received by industrial sector companies, for delivering a variety of products. Only enterprises with over 20 employees are included in the survey. New orders are closely related with future industrial activity. In case the indicator rose in value, this might have a limited bullish effect on the euro.
Italian Retail sales
Annualized retail sales in Italy probably decreased at a pace of 0.4% in January, according to expectations, following a 0.1% uptick in December and seven consecutive months of declines. In monthly terms, retail sales probably rose 0.1% in January, following a 0.2% drop in December. This indicator reflects the change in the total value of inflation-adjusted sales by retailers in the country and provides key information regarding the consumer spending trend, while the latter is a key driving force behind economic growth. In case the monthly retail sales index increased at a faster-than-expected pace, this might have a limited bullish effect on the euro. The National Institute of Statistics (Istat) is to release the official report at 10:00 GMT.
United States
Gross Domestic Product – final estimate
The final estimate of the US Gross Domestic Product probably pointed to an annualized rate of growth of 2.4% in the final quarter of 2014. The 2nd GDP estimate, reported on February 27th, pointed to a 2.2% growth, down from a preliminary rate of 2.6%. The deceleration in real GDP growth in the fourth quarter primarily reflected an upturn in imports, a downturn in federal government spending, and a slowdown in non-residential fixed investment and exports, according to the Bureau of Economic Analysis. The GDP growth reflected positive contributions from personal consumption expenditures (PCE), non-residential fixed investment, exports, state and local government spending, private inventory investment, and residential fixed investment that were partly offset by a negative contribution from federal government
spending. Imports, which are subtracted in the calculation of the GDP, went up.
On a quarterly basis, the final GDP probably expanded 0.1% in Q4 2014, which would confirm the second estimate, reported on February 27th. If so, it would be the slowest quarterly rate of growth since Q2 2010, when economy expanded at a final rate of 0.1%. The flash GDP estimate pointed to a 0.1% contraction.
The report on GDP is of utmost importance for traders, operating in the Foreign Exchange Market, as they will look for higher rates of growth as a sign that interest rates will follow the same direction. Higher interest rates will attract more investors, which will increase demand for the US dollar. If an economy is experiencing a robust rate of growth, the benefits will eventually affect the end consumer, because of the increased likelihood of spending. Furthermore, through increased consumer expenditures the economy has the potential to expand even more. In case the final GDP exceeded expectations, this would certainly heighten the appeal of the US dollar. The official data are due out at 12:30 GMT.
Reuters/Michigan Consumer Sentiment Index – final reading
The monthly survey by Thomson Reuters and the University of Michigan may show that consumer confidence in the United States lowered in March. The final reading of the corresponding index, which usually comes out two weeks after the preliminary data, probably came in at 92.0, up from a preliminary value of 91.2, reported on March 13th. If so, this would be the lowest reading since November 2014, when the gauge was reported at a final value of 88.8. In February the gauge of confidence came in at a final reading of 95.4, up from a preliminary value of 93.6. 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.
According to preliminary data, the sub-index of current economic conditions, which measures US consumers’ views of their personal finances, decreased to a reading of 103.0 in March from a final 106.9 in February. The sub-index of consumer expectations plunged to a flash reading of 83.7 in March, down from a final value of 88.0 in February.
In case the gauge of consumer sentiment showed a larger decrease than anticipated, this would have a bearish effect on the US dollar. The final reading is due out at 15:00 GMT.
Federal Reserve Chair Yellens Statement
At 19:45 GMT the Federal Reserve Chair Janet Yellen is expected to take a statement. High market volatility is usually present during her speeches.
Pivot Points
According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.0930. In case EUR/USD manages to breach the first resistance level at 1.1006, it will probably continue up to test 1.1127. In case the second key resistance is broken, the pair will probably attempt to advance to 1.1203.
If EUR/USD manages to breach the first key support at 1.0809, it will probably continue to slide and test 1.0733. With this second key support broken, the movement to the downside will probably continue to 1.0612.
The mid-Pivot levels for Monday are as follows: M1 – 1.0673, M2 – 1.0771, M3 – 1.0870, M4 – 1.0968, M5 – 1.1067, M6 – 1.1165.
In weekly terms, the central pivot point is at 1.0770. The three key resistance levels are as follows: R1 – 1.1085, R2 – 1.1347, R3 – 1.1662. The three key support levels are: S1 – 1.0508, S2 – 1.0193, S3 – 0.9931.
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