Forex Market: EUR/HKD daily forecast

During yesterday’s trading session EUR/HKD traded within the range of 10.5735-10.6047 and closed at 10.5813.

At 7:40 GMT today EUR/HKD was gaining 0.04% for the day to trade at 10.5894. The pair touched a daily high at 10.5895 at 7:41 GMT.

Fundamental view

Euro zone

Frances final services PMI probably remained in the zone of contraction during June, while confirming the preliminary PMI reading of 48.2, which was reported on June 23rd. The official reading is due out at 7:50 GMT.
The final reading of German services PMI probably confirmed the preliminary value for June, with the index coming in at 54.8. Markit will release the official reading at 7:55 GMT.

The final services PMI in the Euro zone probably also confirmed the preliminary value for June, with the index remaining at 52.8. The official reading is scheduled to be released at 8:00 GMT. The PMI is based on a monthly survey, encompassing a sample of business entities, which represents private sector conditions in terms of new orders, output, employment, prices etc. Higher than expected readings would provide support to the common currency.

Annualized retail sales in the Euro region as a whole probably rose 2.0% in May, according to the median forecast by experts, after in April sales climbed 2.4%. In monthly terms, retail sales probably increased 0.3% during May. This is a short-term indicator, which provides key information about consumption on a national scale. In case the index of retail sales rose at a faster than projected pace, this would have a bullish effect on the euro. Eurostat is expected to publish the official data at 9:00 GMT.

At 11:45 GMT the European Central Bank (ECB) is to announce its decision in regard to borrowing costs. The median estimate by experts suggests that the central bank will probably maintain its benchmark interest rate at the record low level of 0.15% at the policy meeting today. The ECB cut borrowing costs by 0.10% at its prior meeting on June 5th. Short-term interest rates are of utmost importance for the valuation of national currencies. In case the central bank is dovish about inflationary pressure in Euro zones economy and thus, either puts interest rates on hold, or reduces them, this will usually have a bearish effect on the common currency.

The interest rate decision is to be followed by the press conference with ECB President Mario Draghi, at which he takes a statement on monetary policy. During this event volatility of euro crosses is usually high. In case Draghi offers a more hawkish tone, the euro will usually receive support, while a more dovish tone will have a bearish effect on the currency. The press conference is scheduled at 12:30 GMT.

Hong Kong

Annualized retail sales in Hong Kong probably decreased at a pace of 6.4% in May, according to the median estimate by experts, following another 9.8% drop in April. This indicator reflects the change in the total value of inflation-adjusted sales by retailers in the country and provides key information regarding consumer spending trend, while the latter is a key driving force behind economic growth. In case retail sales index dropped at a faster than expected pace, this would have a bearish effect on the national currency. The Census and statistics department is expected to release the official report at 8:30 GMT.

Technical view

According to Binary Tribune’s daily analysis, in case EUR/HKD manages to breach the first resistance level at 10.5995, it will probably continue up to test 10.6177. In case the second key resistance is broken, the pair will probably attempt to advance to 10.6307.

If EUR/HKD manages to breach the first key support at 10.5683, it will probably continue to slide and test 10.5553. With this second key support broken, the movement to the downside will probably continue to 10.5371.