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Forex Market: EUR/USD daily trading outlook

Yesterday’s trading session saw EUR/USD hold in the range of 1.3210 – 1.3153. The pair closed at 1.3192, adding 0.17% on a daily basis, having declined 1.20% last week.

At 6:42 GMT today EUR/USD was up 0.08% for the day to trade at 1.3204. The pair fell to a daily low of 1.3189, close to yesterdays trough of 1.3153 which was the lowest since September 6th, 2013, while days high stood at 1.3218.

Fundamental view

Eurozone business and consumer confidence

The European Commission is expected to report at 9:00 GMT that its index of executive and consumer sentiment fell in August to the lowest in half a year. The Economic Sentiment indicator is projected to register at 101.5, compared to 102.2 in July, the weakest since February.

Business Climate is projected to have worsened, with the respective indicator scoring at 0.1 from 0.2 in July, while consumer confidence also likely fell, touching -10.00, compared to -8.40 in July.

Like with other economies, here consumer confidence is considered as a leading indicator as well as it has a predictive value for consumer spending, which itself is a major part of GDP. The reading is based on a survey of about 2 300 consumers within the Eurozone, which are asked to evaluate the economic prospects ahead.

Industrial sentiment is also expected to have worsened in August, with the corresponding indicator projected to have fallen to -5.0 from -3.8 in July.

Spain

Spain’s economy grew by at an annualized 1.2% pace in the second quarter, the National Institute of Statistics will likely report at 7:00 GMT, following a 0.5% rise in economic output in the first quarter. Quarter-on-quarter, the Spanish economy is expected to have achieved an expansion rate of 0.6%, compared to 0.4% in the previous three months.

Spain’s annualized index of consumer prices (CPI) probably fell 0.2% in August, according to preliminary estimates, after contracting by 0.3% in July. The index measures the change in price levels of a basket of goods and services from consumer’s perspective and also reflects purchasing trends. In case the CPI dropped more than projected, this would have a bearish effect on the euro. The National Institute of Statistics will release its official report at 7:00 GMT.

Spain’s annualized CPI, evaluated in accordance with Eurostat’s harmonized methodology, probably marked a 0.6% decline in August, compared to a 0.4% contraction in July.

Germany

The number of unemployed people in Germany probably dropped by 5 000 in August, according to the median forecast by experts, after a decline of 12 000 during July. A possible decrease is indicative of a more active consumer spending, while the latter is tightly related to economic growth. At the same time, the seasonally adjusted rate of unemployment in the country probably remained unchanged at 6.7%. In case the number of the unemployed Germans decreases more than projected and the unemployment rate drops, this would have a bullish effect on the euro. Germany’s Statistics Office will release the official data at 7:55 GMT.

Later in the day, at 12:00 GMT, Germany’s Federal Statistical Office will likely report that its preliminary annualized Consumer Price Index probably rose by 0.8% in August, matching July’s rise. Month-on-month, consumer prices are expected to have remained flat, compared to a 0.3% rise in July.

The index presents a general picture of the price change in the country, while encompassing all household types, all regions and all goods and services demanded (food, clothing, automobiles, rental, repair and hairdressing services etc). The index is based on a basket of goods and services, which is regularly renewed, so that goods and services, purchased more often by consumers, are included in the present survey.

The leading EU nation’s preliminary annualized CPI, evaluated in accordance with the harmonized methodology, probably also matched July’s 0.8% rise, while on a monthly basis Germany’s HICP was flat.

In case the CPI came below expectations and distanced further from the 2-percent inflation objective, set by the European Central Bank, this would mount selling pressure on the euro. Destatis is scheduled to publish the CPI report at 12:00 GMT.

Italy

Italy’s National Institute of Statistics is likely to report at 08:00 GMT that retail sales in the Eurozone’s third-largest economy fell by an annualized 0.9% in June, compared to a 0.5% decline in May. Month-on-month, retail sales probably contracted by 0.2% following a -0.7% reading during the preceding period.

A separate report by the Organisation for Economic Co-operation and Development is poised to show that business confidence in Italy fell in August to the lowest since March. The corresponding indicator probably slipped to 99.3 from 99.7 in July.

United States

The US Department of Commerce will release its revised preliminary reading on US GDP growth at 12:30 GMT. According to analysts projections, the worlds biggest economy probably expanded by 3.9% in the second quarter, compared to the initial reading of 4.0% and the first quarters 2.1% contraction.

The GDP represents the total monetary value of all goods and services produced by one nation over a specific period of time. What is more, it is the broadest indicator of a countrys economic activity. The report on GDP holds a lot of weight for traders, operating in the Foreign Exchange Market. It serves as evidence of growth in a productive economy, or as evidence of contraction in an unproductive one. As a result, currency traders 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, willing to purchase assets in the country, while, at the same time, this will increase demand for the national currency.

Separately, the Labor Department is expected to report that the number of people who filed for initial unemployment benefits in the week ended August 23rd rose to 300 000, up by 2 000 from the preceding period.

Additionally, the index of pending home sales in the United States probably rose 0.5% during July compared to June, when sales unexpectedly dropped by 1.1%..

When a sales contract is accepted for a property, it is recorded as a pending home sale. As an indicator, the index provides information on the number of future home sales, which are in the pipeline. It gathers data from real estate agents and brokers at the point of a sale of contract and is currently the most accurate indicator regarding US housing sector. It samples over 20% of the market. In addition, over 80% of pending house sales are converted to actual home sales within 2 or 3 months. Therefore, this index has a predictive value about actual home sales.

The National Association of Realtors (NAR) will release the official index value at 14:00 GMT. In case pending home sales increased more than anticipated, this would have a bullish effect on the greenback.

Technical view

eur-usd-28.08

According to Binary Tribune’s daily analysis, the central pivot point for the pair is at 1.3185. In case EUR/USD manages to breach the first resistance level at 1.3217, it will probably continue up to test 1.3242. In case the second key resistance is broken, the pair will probably attempt to advance to 1.3274.

If EUR/USD manages to breach the first key support at 1.3160, it will probably continue to slide and test 1.3128. With this second key support broken, movement to the downside will probably continue to 1.3103.

The mid-Pivot levels for today are as follows: M1 – 1.3116, M2 – 1.3144, M3 – 1.3173, M4 – 1.3201, M5 – 1.3230, M6 – 1.3258.

In weekly terms, the central pivot point is at 1.3287. The three key resistance levels are as follows: R1 – 1.3353, R2 – 1.3466, R3 – 1.3532. The three key support levels are: S1 – 1.3174, S2 – 1.3108, S3 – 1.2995.

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