Forex Market: EUR/USD daily forecast

During yesterday’s trading session EUR/USD traded within the range of 1.3689-1.3772 and closed at 1.3708.

At 6:50 GMT today EUR/USD was adding 0.12% for the day to trade at 1.3717. The pair touched a daily high at 1.3723 at 6:25 GMT.

Fundamental view

Euro zone

Industrial production in the Euro zone probably dropped 0.3% in March from the previous month, according to the median analyst’ estimate. In February, industrial output rose by 0.2%. On year-over-year basis, the index probably rose 0.9% in March, following a 1.7% increase in the previous month.

Industrial production is an indicator of the business cycle that shows the activity and development in the industry as a whole, by measuring the change in volume for a certain period of time. Information on industrial production is raised through special studies for EU members, which are called Prodcom. They cover between 5000 and 6000 products. The index measures the percentage change from the previous month.

A larger than expected increase in the industrial output would heighten the appeal of the euro. The official report is due out at 09:00 GMT.

United States

United States’ annualized index of producer prices (PPI) probably jumped by 1.7% in April, according to the median estimate by experts, after adding 1.4% in the previous month. This index reflects the change in prices of over 8 000 products, sold by manufacturers during the respective period. The PPI differs from the CPI, which measures the change in prices from consumer’s perspective, due to subsidies, taxes and distribution costs of different types of manufacturers in the country. In case producers are forced to pay more for goods and services, they are more likely to pass these higher costs to the end consumer. Therefore, the PPI is considered as a leading indicator of consumer inflation. Higher than expected producer prices would have a bullish effect on the greenback.

Nation’s annualized core PPI, which excludes prices of volatile categories such as food and energy, probably remained steady at 1.4% in April. This indicator is quite sensitive to changes in aggregate demand, thus, it can be used as a leading indicator for the economy. However, because of its restrained scope, it is not suitable for future inflation forecasts.

The US Bureau of Labor Statistics is expected to publish the official PPI readings at 12:30 GMT. Higher-than-expected readings would support greenbacks demand.

Technical view

According to Binary Tribune’s daily analysis, in case EUR/USD manages to breach the first resistance level at 1.3757, it will probably continue up to test 1.3806. In case the second key resistance is broken, the pair will probably attempt to advance to 1.3840.

If EUR/USD manages to breach the first key support at 1.3675, it will probably continue to slide and test 1.3640. With this second key support broken, the movement to the downside will probably continue to 1.3591.