Forex Market: EUR/MXN daily trading forecast

Yesterday’s trade saw EUR/MXN within the range of 17.3428-17.4218. The pair closed at 17.4180, gaining 0.21% on a daily basis.

At 8:50 GMT today EUR/MXN was down 0.09% for the day to trade at 17.4017. The pair broke the first key weekly support level and touched a daily low at 17.3912 at 8:25 GMT.

Fundamental view

Euro zone

Confidence among consumers in the Euro area probably worsened in August. The preliminary Economic Sentiment Indicator (ESI) probably slid to -9.0 in the current month from a final reading of -8.4 in July, as reported on July 30th. The ESI reflects the level of optimism, which consumers have about economic development. The survey is conducted by phone and includes 23 000 households in the Euro zone. The questions asked stress on current economic and financial situation, savings intention and also on expected developments regarding consumer price indexes, general economic situation and major purchases of durable goods. The indicator measures consumer confidence on a scale of -100 to +100. A reading of -100 suggests a lack of confidence, zero means neutrality and a reading of +100 indicates extreme levels of confidence. Higher confidence usually implies greater willingness to spend, including large-ticket purchases, while consumer spending is a key factor behind economic growth. Therefore, in case the ESI fell more than anticipated, this would mount selling pressure on the euro. The European Commission is expected to release the preliminary reading at 14:00 GMT.

Mexico

Mexicos annualized Gross Domestic Product probably expanded 1.5% during the second quarter of the year compared to the first quarter. In Q1 economy grew at an annualized rate of 1.8%, which has been the fastest growth rate since Q4 2012. Agriculture expanded at an annualized rate of 4.9% in Q1, recovering from a 0.2% drop, registered in Q4 2013, due to increased production of corn, avocado, orange and potatoes. Industrial production grew 1.6% in Q1, following four successive quarters of contraction. Services industry added 1.8 percent in Q1 on the back of trade and real estate sectors, after another 2.1% expansion in the last quarter of 2013.

Mexican GDP probably rose 0.8% in Q2 compared to Q1, according to market expectations, following a 0.3% growth in the first quarter.

The GDP represents the total monetary value of all goods and services produced by one nation over a specific period of time. Higher rates of growth suggest that interest rates may follow the same direction. Higher interest rates, on the other hand, will usually attract more investors, willing to purchase assets in the country, while, at the same time, this will increase demand for the local currency. Therefore, in case economic growth in Mexico surpassed the median forecast by experts, this would provide support to the peso. Instituto Nacional de Estadística y Geografía is expected to publish the GDP report at 13:00 GMT.

Technical view

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 17.3942. In case EUR/MXN manages to breach the first resistance level at 17.4456, it will probably continue up to test 17.4732. In case the second key resistance is broken, the pair will probably attempt to advance to 17.5246.

If EUR/MXN manages to breach the first key support at 17.3666, it will probably continue to slide and test 17.3152. With this second key support broken, the movement to the downside will probably continue to 17.2876.

The mid-Pivot levels for today are as follows: M1 – 17.3014, M2 – 17.3409, M3 – 17.3804, M4 – 17.4199, M5 – 17.4594, M6 – 17.4989.

In weekly terms, the central pivot point is at 17.5193. The three key resistance levels are as follows: R1 – 17.5865, R2 – 17.6569, R3 – 17.7241. The three key support levels are: S1 – 17.4489, S2 – 17.3817, S3 – 17.3113.